“I always look at the risks first”, my mentor told me when I asked him about his approach to projects.
Yes, looking at risks is important. But you need to document your findings.
The risk register is the tool you use to document risks in your projects.
What is a risk register?
Projects are mean bastards. They consume outrageous amounts of effort and huge piles of cash. As an organization running projects, you want to make sure that your projects don’t fail.
How do you do that?
Well, you have all your project managers do a risk assessment before any project gets approved. And you don’t let them use whatever form they like, but instead provide a standard template for entering all possible risks. This document is called risk register. It is one of the most important project documents.
The risk register lists out the potential risks that the team has identified. It also asks for measures that can be taken to ensure these risks don’t turn into a tsunami that will eventually drown the project.
The real purpose of a risk register
You might think that the only reason to have a risk register yes to simply write down what you have found. But this is not entire idea behind the document. A risk register is primarily a tool for communication. It enables you to communicate your concerns and the risks you have identified to your management. Because risks are written down, it has greater weight than when you just voice your doubts in a conversation that people will forget once it’s over.
Writing brings clarity
The great thing behind writing down the obstacles you see, is that the writing process helps you clarify what the real problem is and get clarity on the consequences. For example you, you may be worried that X will cause problem and your project. This is a very general statement, end it doesn’t say anything about exact consequences. It also doesn’t give you any idea about what should be done to limit the risk. On the other hand if you Think through the issue, and clearly State they expected negative consequences, you and your team are able to derive actions and measures that ken reduce their problem
The Risk Register Template I Use
Here is the template I have used in my projects. It’s a professional risk register how it is used in major companies that give much attention to risk management.
How to use the Template
Unlike my other project management templates, this one isn’t as straightforward to use. What the heck do the columns mean? Let me guide you through the sheet step by step.
List down the risks
Together with your project experts and stakeholders, list down the potential risks the project could be facing.
Assign a risk category
Risks aren’t all equal. Some risks are driven by technical factors. Other risks are caused by the staffing situation. For example, when people are tied up in several projects and part of the work isn’t getting finished.
Use the following risk categories to qualify risks:
| Risk category | Description | Example |
|---|---|---|
|
RR |
resource risk |
Too many projects happening at the same time, with too few resources. Resources may be withdrawn from your project and assigned to other projects. |
|
TR |
time risk |
The development if a product takes langer than planned. |
|
QR |
quality risk |
A custom-built device does not provide the desired level of accuracy. Let’s say a chemical detector detects the substance under consideration only in 92% of cases when the goal was 99% accuracy. |
|
FR |
financial risk |
The construction of a bridge turns out to be more expensive than planned. This can cause solvency issues for the builder. |
What you see above are just the most common categories of risks. Depending on your project, it may make sense to add further categories to the spreadsheet. For example environmental risks, brand risks, health risks etc.
Assess the impact for each risk
The impact indicates how serious the consequences of a risk are. A low impact means there is not much damage done to your project if the risk materializes. High impact means you expect serious negative effects — an explosion of your budget, major rework, significant project delay etc.
Assign an impact value for each risk you have listed:
| Impact level | Value to assign | If risk x occurs, this will lead to ... |
|---|---|---|
|
low |
1 |
minor financial impact |
|
medium |
2 .. 4 |
medium financial impact
medium delay |
|
high |
5 |
massive financial impact (additional cost) |
Estimate the probability of the risk
Your next step is to estimate the probability for the risk to happen. Is there only a low chance that the risk will materialize, or do you believe it’s very likely to happen?
Make a guess and enter the probability factor into the sheet:
| Probability | Factor to enter | Meaning |
|---|---|---|
|
low |
1 |
unlikely to happen |
|
medium |
2 .. 4 |
probably going to happen |
|
high |
5 |
risk most certainly to materialize |
Calculate the overall risk value
Now that you have estimated the risk impact and probability and entered the appropriate values into the risk register, it’s time to calculate the overall risk value.
The overall risk value is simply the product of the impact and probability factor:
overall risk value = impact x probability
Assign a risk Owner
We are not done yet! You still have to assign a risk owner to every risk. The risk owner is the person in charge of monitoring the risk and taking suitable measures to limit its impact.
Define mitigating actions
Think of any measures that can be taken to bypass the risk, or at least to reduce its impact on your project. Put those measures into the sheet.
