A lot of companies fail because they're not ready to handle new hurdles as they come along; actually they fail at managing risks. What can they do about it?
What's in this article:
- A quick look at risk management; what it is and who it is for.
- How to manage risk in Jira, in the simplest way, using our upcoming Jira risk management app Hedge.
"Risk management in projects is about identifying, analyzing and treating potential impacts based on an assessment of likelihood and consequence"
Every organization will face unexpected risks, it’s inevitable; what we can do however is act instead of reacting. Risk management helps you stay on track because it’s a proactive planning process that identifies risks ahead and how to handle them.
This article is based on the JiraCon'21 presentation by Jexo's awesome co-founder/CEO, Biro:
What is the purpose of risk management?
The purpose of risk management boils down to 4 key results:
- Identify possible risks
- Reduce possible risks
- Better handle risks
- Improve on plans and make them more grounded
Who is risk management for?
You might think that risk management applies to big companies with large projects and programmes. It’s true that these companies get hit hard when unexpected issues arise, because of intricate dependencies across teams, but smaller teams are definitely not off the hook! Actually, risk could have more impact on SMEs because of their lack of resources.
Why should SMEs pay attention to risk management?
Say you’re launching your first app, and have enough money to pay a small developer team for the duration of 6 months. Do you have a backup if you were to go beyond the 6 months? And though your project may be estimated to finish in 4 months, will you nonetheless put in place a contingency plan?
Well, you should if you're proactive! And if you don’t think ahead about the risk of such a situation arising, you might just run out of budget before your project is even ready, and then, you’ll probably waste your time trying to get back on track.
Does risk management help relieve stress at work?
If the word risk is not yet part of your vocabulary, then you’re probably working in a volatile and unpredictable environment that generates a lot of stress. Being ready for challenges helps everyone keep a positive and constructive outlook on things; and actually, managing risk is a part of life - a natural response to the ever-changing variables.
What 6 questions should you ask your team for every deliverable?
- What could happen?
- What is the probability of it happening?
- What important aspects will be affected by this happening?
- What could you do about it?
- Who will be taking ownership of this risk?
- Did your plan work well?
If you’re already asking these 6 questions and answering them with your team, then congratulations, you’re practicing risk management! For those who aren’t, let’s look at these questions and translate them into step-by-step processes we can make use of:
1. Identify your project risks
Keep adding risks to a risk register (throughout the lifecycle of your product) so that everyone on your team can contribute.
2. Analyze the risks
Every risk has a probability of happening; rate that probability as high, medium or low.
Early on, it may be hard to figure this out given we rarely get enough initial information to properly assess. However, as your project progresses and details unfold, and of course as you get more experienced with this, it becomes easier!
3. Prioritize your risks
Try to figure out which risks will have a higher impact on the outcome of your project by rating them from high to low impact, and what resources you’ll need to resolve those risks if they were to tag along.
4. Respond to risk
Determine whether your risk is positive or negative, i.e. is it a threat or an opportunity? Is it a risk you can make use of to make your project better? Or would the risk hinder your progress?
Once you’ve established this, you then have 3 ways to respond (based on the factors you’ve gathered so far of course):
- Avoid it altogether
- Work on reducing the risk
- Accept the risk, alongside a contingency plan should the risk occur
5. Assign risk owners
You could have one person by default owning everything, but that could create (and probably will) a culture of people who are less responsive, less responsible, and more detached.
Not to mention this may be a little too much for one person to handle. It’s usually better to distribute ownership of risks!
6. Monitor the risk
Assigned owners need to constantly monitor and be up to date. For you to be able to identify risks as they tag along, the question you could ask is “what changed?” Moreover, as you respond to existing risks, new ones might appear out of nowhere due to project decisions, inflection points and of course, responding to existing risks.
How do you manage project risks in Jira?
There’s no clear cut for this, but we think we've figured it out: a risk management tool built for Jira!
Confluence, spreadsheet or standalone app?
You could (if you wanted to) structure a Confluence page to represent your risk register where you’d throw in your risks, but you’ll still lack a way to classify your risks with values for probability, importance and so on.
You could also use a spreadsheet - which would probably be over simplistic, or a standalone tool, which may turn out clunky and expensive.
Is there a risk management tool for Jira?
Instead of using Confluence, spreadsheets or a standalone app to manage risks in Jira, we came up with a risk management solution called Hedge - a Jira Cloud app built with Forge and designed to help any type of Jira team manage their project risks.
Thanks to a super neat, easy-to-use interface, Hedge allows you to create risk registers, conduct risk assessments, and prioritize in a oh-so simple manner!
1. Generate risk registers in Jira
Generate risk registers associated with one or more projects, and share risks across multiple teams.
2. Assign a Jira risk register owner
Assign an owner for your Jira risk register, i.e. the person responsible for administering changes.
3. Access the status of your Jira register
View the status of your register; whether it's active or inactive.
4. Set a template for your risk registers
Choose from a list of predefined Jira risk register templates when it comes to your risk matrix and the factors that make sense to you; or customize by creating your own.
5. Create risks as you would a regular Jira issue
Once you’re set up with your Jira risk register, you can easily create all potential risks using the Jira issue creation view. Hedge makes use of the custom issue type, which means that once you've generated a project risk register, the issue type risk is automatically created for that specific project.
Hedge basically allows you to create a risk the same way you would a regular Jira issue; and you could easily access it through your screen!
6. View overall scores in risk view screen and report
Once you’ve identified your risks, each of these risks is assessed in order to calculate the likelihood of it happening, the impact it could have, and what the response could be. You could handle all of this easily by using Hedge’s risk view - where you'd be able to access overall scores so you can prioritize your risks.
Both probability and impact metrics can be simple dropdown options, or could be calculated based on additional factors you choose. The impact metric for example can be broken down into financial impact, customer impact and so on; you can be as specific as you want when determining important risks for your team.
Moreover, the formula to establish your risk score is customizable; you can even alter it to include issue fields as your variables.
And if that isn't enough already, Hedge will give you a reporting section for every risk register you create, with key reports such as risk matrix, trends, mitigation plan tracking, burndown chart and other key risk indicators you'll need.
Bottom line is; we use Hedge to be able to put together a contingency plan (just in case), and take early action in order to avoid or reduce the probability of a risk happening. Hedge allows you to link Jira issues to your risks as you track progress, and assign any Jira user you choose as the risk owner.
We’re on a mission to help promote risk-conscious teams with Jira applications that are easy-to-use and simple, and we’re definitely on the right track with Hedge!
If you're interested in getting updates about Hedge, leave us your email here!