Risk is always a part of doing business. Whether it is deciding to move manufacturing operations to another country or pursuing a television advertising rather than print, every decision carries a risk. The key to emerging from problems relatively unscratched is risk management. In this article, we’ll take a look at your options:
Basically, this option entails having a Plan B or a “just in case” plan. If you have a good contingency plan, you’ve already significantly minimised the risk if something goes wrong in the original plan. For example, choosing a preferred supplier is one thing but it is also important to have the contact details of other suppliers who offer the same product even if they charge slightly higher rate.
If it is possible to reduce risk, it is important to do so. Risk mitigation involves making a judgment based on the probability of success of failure of a project. This method also foresees the consequences for the project or company if something goes wrong. It can be the loss of time, loss of money, or loss of manpower. Risk mitigation tries to minimise the losses associated with these.
Having an adequate system that tracks risks probability can be highly beneficial. In order to be effective though, the system should also be flexible enough to evaluate the probability at different stages of the project. Monitoring entails accepting a level of deviation from the initial plan; in essence, the project manager determines whether the variance is acceptable.