This document discusses risks in enterprise project management. It notes that risks come in many forms, from regulatory to technological, and can seriously impact projects like they did for Nokia and RIM. Effective risk management requires experience, business knowledge, and foresight. Identifying and planning for risks is crucial for success. Common risks include unclear requirements or scope, budget issues, and lack of proper processes. The document provides strategies for setting up risk management, including building a risk register and response plans to mitigate threats and exploit opportunities. It emphasizes implementing project management best practices and tools to track tasks and reduce failures.

1. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
Understanding the Risks in Enterprise Project Management
Risks are a given for any initiative or enterprise across industries. No wonder, PMI has
dedicated a detailed process around risk management as part of their PMP certification.
Projects small or large all involve risks. Having the right understanding and strategy to handle
risks is crucial to the project success and the enterprises’ too.
Risks can be of various types and probability and can be lurking across various corners of your
project be it regulatory, natural, competition, change of business landscape, advent of
disruptive technology. You name it.
Take the e.g. of Nokia and Research in Motion (RIM). Both were the super powers of the mobile
phone industry. But the risk of not adopting to the new technology and user sentiment cost
them their business and drove them almost to a point of no return.
To begin with, it has to be a mainstream activity and a must-have component of your projects.
Right from the beginning!
It is a tough ask; no doubts about it. And neither is it everyone’s cup of tea.
Risk Management requires experience, thorough knowledge of your business, the projects
you are dealing with and a lot of foresight.
But if done rightly, the rewards are significant. When the project stakeholders accord the due
importance to risk management, they have increased their chances of success by 50%.

2. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
Having established the significance of identifying risks, let us take a look at some of the
common risks in project management and strategies to mitigate them.
Budget and Cost Risks
Enterprises with an established PMO and that follow the project management practices
thoroughly usually place a “contingency fund” into the project budget.
This is something that is controlled by the project sponsor and is typically between 5-20% of the
total project budget.
A smart thing to do. But what warrants the need for the contingency funds? Risks!
When you think of risks associated with cost, the usual suspects are:
 Incorrect project cost estimation
 Change is cost of materials involved in the project
 Delivery delays
 Penalties
 Outsourcing of work to expensive contractors and service providers
 Unexpected travel, purchase & licensing costs etc.
 New regulatory and compliance requirements, policy changes
 Natural disasters
Be fully aware that managing and mitigating risks involves a lot of cost. A simpler e.g. is that of
building a disaster recovery site for your IT infrastructure (data centre). It is a risk mitigation
plan baked right into the project management plan. And building such site requires quite an
investment.
Again, understanding risks is important. Because it isn’t about building a DR site but how many,
where? A lot of experience and planning goes into it.
Unclear Requirements or lack of Scope
Take a moment here and think what the major contributors are towards the budgetary risks?
A deep hard look at your project scope will say it all. Nine out of ten times you will find that lack
of a proper signed off scope is the source of a lot man risks in the project.
How can a less than complete scope be so dangerous?

3. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
Well, to start with, you do not know what you are dealing with i.e.
 The project goal is unclear
 Extent of efforts and resources required isn’t known
 Skills required to deliver the project is unknown
 Technology requirements are missing
 Training, travel and tool costs cannot be estimated rightly.
Now running anything with so many vague elements is always dangerous and very soon the
project is more of a rudderless ship.
Just translate this for the large and complex projects run by enterprises; 1000s of hours are at
stake, lot of skilled resources (expensive resources) coupled with delays. You are all set for a
major cost overrun.
No one would like to run projects that aren’t profitable and further the organization’s vision.
It is not only the financial impact but lots of intangible losses are joined at the hip too. To start
with:
 Loss of employee satisfaction and morale
 Customer satisfaction and trust is dented
 Chaos all around leads to bickering among the teams
 Loss of reputation and impact to the brand
Lack of the right Processes
Anyone with basic knowledge of PMP would know that there are 5 process groups and 47
processes. 47! Is something wrong with PMI?? Absolutely Not!
And there are 10 knowledge areas among these 5 process groups.
Integration Management, Scope Management, Time Management, Cost Management, Quality
Management, Human Resources Management, Communication Management, Risk
Management, Procurement Management, and Stakeholders Management.
“A quick look into these knowledge areas will give you enough contexts as why processes are
so important to your projects.”
All the vital elements that go into project success are covered by these knowledge areas
starting from the triple constraints to risk management and stakeholder management.
The logic here is noteworthy. All of these processes and the knowledge areas are to ensure all
project elements function seamlessly and are tightly coupled.

4. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
Be it your signed scope, the resource plan, communication plan, risk plan, quality assurance and
the overall project management plan; all are there for a purpose -
I.e. each and every personnel involved in a project knows what he needs to do, when, why,
how and where he can find all the information, tools and privileges to get the job done!
It is a grand puzzle that takes shape when each component is well-defined and implemented.
Imagine a scenario –
When the project teams isn’t aware what they are supposed to do, whom they turn to in times
of crisis, where do they find the project scope and if their deliverables are of acceptable quality?
What do you think a project like this would look?
The above scenario clearly indicates there is no proper scope document, no communication
plan, no risk management plan and no quality assurance plan.
So, as a Project Manager, ensure that the components applicable for your project are rightly
baked into your project management plan. All of it and always!
Let us shift our attention towards taking charge and keeping our project risks to the minimum.
Getting Ready for Risk Management
Risk Management begins with risk identification, analyzing risks, making a strategy – risk
response and continuous monitoring through each of the project phases.
The whole concept of documenting all of these is known as risk management plan.
As a first step –you build a risk register! Risk register is the central home of all your risks.
But note: it is a team activity. You must aim to get as many hands on the deck possible because
one person can just not know it all. Secondly, it has to be a living document throughout the
course of the project.
To identify risks you would deploy strategies like – brain storming sessions, interviews with the
SMEs, reviewing similar past projects etc.
Risk analysis is slightly complex process where the goal is to
 identify which identified risks are most likely to occur
 their impact on various project objectives
 likely investment required to mitigate and deal with those risks
Once you are done with Risk Identification and Risk Analysis you plan your risk response
strategy!

5. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
So far it looks as if risks are bad. Very bad! Not entirely. Here is the fun.
Risks are usually categorized as – Positive Risks and Negative Risks
As the names indicate Negative Risks are threats which if realized will adversely impact you
project and its outcomes.
On the other hand Positive Risks are more often opportunities which you can plan to enhance
and exploit to your advantage.
The typical response plans for negative risks is usually to avoid & transfer and if not escalate
and accept.
Similarly when it comes to positive risks your best bet is to enhance the probability of it
occurring, exploit when it occurs. At the same time if it is too big for you to exploit alone you
share and partner to realize the benefits.
If not, then you escalate and accept.
Note that escalate and accept are common response strategies for both risk types. In escalate
you put the onus on the decision makers, project owners and in accept – you just document it
and take no action!
2 Right Steps!
In my experience, risks is a game of unknowns and is all about dealing with uncertainty. But the
assuring part is there is enough information and guidance available to mitigate and deal with
them effectively.
It is not the risks that cause failure. It is the act of negligence on our part to not prepare for it
that puts us in harm’s way.
A Gartner research points that
“Among IT projects, failure rate corresponds heavily to project size. An IT project with a budget
over $1M is 50% more likely to fail than one with a budget below $350,000. For such large IT
projects, functionality issues and schedule overruns are the top two causes of failure (at 22%
and 28% respectively)”

6. © 2011-2019 Orangescrum | Enterprise Project Management Software | www.orangescrum.org
1. The key is to focus on the right project management knowledge areas and actively
implement the processes to track scope changes, defect management, time
management, resource management and project schedule management effectively.
2. Project Management solutions have proven to be highly effective in delivering projects
successfully with optimum satisfaction. On-premise or SaaS both provide a host of key
project management features that are the need of the hour.
Thus, invest in proper adoption of the project management practices and the right enterprise
project management tool for your teams!