Why All Projects Carry Risk
Risk is everywhere - in our domestic lives, our social situations, and particularly in our business activities. Some vendors guarantee "risk-free" projects, but this is invariably a false promise. All projects carry risk, and following are some of the reasons why:
Uniqueness: Each project stands alone in its essence, with tasks and activities that often haven't been tackled before. This novelty inevitably breeds uncertainty, translating into project risk.
Complexity: Projects have multifaceted dimensions, from technical to commercial and relational aspects. The interaction of these components can lead to unexpected complications, thereby escalating the risk quotient.
Assumptions: Project management involves making educated predictions about future circumstances. Since we don't have perfect knowledge about the future, these assumptions necessarily carry risk.
Fixed Objectives: Rigid project goals are common and sometimes conflict with each other ("we want this product delivered quickly and also to the very highest standard"). The pressure to achieve specific, sometimes competing targets will amplify the risk.
Human Factor: The unpredictable nature of the people involved in a project can add to the risk. The diversity in personality traits and decision-making approaches often creates unforeseen problems.
Environmental Changes: The internal and external environments in which projects operate can shift unexpectedly. These changes can introduce unforeseen risks that are difficult to predict and manage.
Resource Availability: Projects heavily depend on resources like staffing, materials, equipment, and finances. These can shift due to factors outside the project manager's control, meaning they all carry risk.
Regulatory Changes: Shifts in local, national, or international laws and regulations can introduce new risk elements during the project's life cycle.
Market Volatility: Market changes like fluctuating consumer demand, economic downturns, or heightened competition can pose substantial risks, especially for market-sensitive projects.
Technological Uncertainty: Rapid technological shifts or unpredictability of new technology performance can become a significant risk factor, particularly in tech-focused projects.
The idea of a risk-free project is a fallacy. Every project, regardless of its scale or sector, carries some risk. The key to successful project management lies not in completely avoiding risk but in adeptly managing it as and when it arises.
Risk Register by ProjectBalm is a proven tool that helps you record and manage your risks.