What Is Risk Prioritization in Project Management?

Rolling out a new information technology (IT) platform always requires some level of project management. The processes of planning, organizing, and assigning responsibilities is how you get the project done.

Whether you’re planning to develop software, install hardware, upgrade networks, incorporate cloud computing, or implement business analytics or data management- for any and all of it, you need to prioritize risk in project management.

The question is: How can one do that efficiently?

What Is Risk Prioritization?

Risk prioritization is the process of identifying all the risks to a project and then deciding which ones are the most severe, so they can be addressed first. Prioritization should be based on the likelihood of a risk and the potential harm it poses to the organization.

How Do You Determine the Priority of Risks?

After analyzing a project’s risks, your team should establish a risk level for each one by placing risks into a risk matrix. The project team and risk management staff do the actual evaluating; those decisions can often be simplified by using risk levels that have been defined in advance.

Risk levels are typically defined as:

• Tolerable risk is considered to have limited or no harm to the project’s objectives; the probability of occurrence is expected to be sufficiently low to cause no concern.
• Low risk is likely to have minor adverse effects on the project goals; the probability of occurrence is expected to be low enough to cause minimal concerns.
• Medium risk is defined as impacting the project’s targets, cost, or timeline. The chance of it occurring is high enough to warrant close control of risk factors contributing to it.
• High risk is considered to have a high likelihood of happening, and the outcome will harm the project’s objectives, budget, and timetable.
• Intolerable risk is identified as having a very high probability of happening and high criticality. The resultant consequences on cost, schedule, and performance would significantly harm the budget, timeline, and development.

What Is Project Management in Information Technology?

Project management in IT focuses on defining the goal or need, planning the steps to meet the goal, executing the plan, monitoring and controlling the work to remain within the budget, and closing out each step. In short, project management is a bundle of work that often goes unappreciated.

Start with Risk Identification to Streamline the Process

A risk event is defined as a potential event or condition that can help or harm the project. Not all risks are adverse. Some, such as early project completion, are positive. For example, risk software development completed ahead of schedule increases productivity. At the same time, however, early completion might affect the training schedule for using the software appropriately.

In IT, identified risks fall into three categories.

Risk in Execution

Execution risk focuses on resource availability, stakeholder commitment, employee competence in performing the work, and resistance within the organization.

Risk in Integration

Integration risk covers the problems when technology and business processes don’t work well together. Potential impacts are typical to day-to-day operations, resulting in operational risk.

Risk of the Unknown

Although anything can happen, not everything will. Despite the term “unknown,” many of these potential risks can be identified by looking at other organizations doing similar projects, and reviewing what happened to them.

What Are Various Forms of Risk?

Potential risks in IT projects fall into five different categories.

Cybersecurity Risks

As an IT project manager, you incorporate new technologies that enable business processes, but untested technologies come with untested vulnerabilities. To examine these risks, you need to understand weaknesses that hackers can exploit. Some risks to evaluate include:

• Web security application
• Network security
• Domain name server (DNS)
• IP address
• Malware and ransomware

Control Risks

All processes have inherent risks, which typically are too high for the organization to accept; so the organization introduces controls to push those risks down to lower, acceptable levels. For example, you might introduce user access controls to manage access to confidential data. Those controls, however, might not be designed correctly or might not work as expected. So IT projects must police against the risk of control failures – that is, control risks.

User and Functionality Risks

End-users can lead to additional risks when they aren’t adequately trained, and functionality requirements must meet internal stakeholder needs. As the project develops based on user feedback, developers need to update or rework the project to respond to these needs. Some risks to evaluate include:

• User access and authorization
• Web security application
• Adoption rate
• Training

System Architecture Risks

Incorporating a new application into your current business processes creates a new avenue for malicious actors to access your information. You need to consider the probabilities and consequences of adding another connection to your overarching IT landscape, whether that’s a new app added to the technology stack or new users added to the network. Some risks to evaluate include:

• Vendor security
• Interdepartmental dependencies
• Quality assurance
• Problem resolution
• System interfaces
• System inputs and outputs
• Residual information protection
• Encryption

Performance Risks

Any project attempts to enable business processes. As a project develops in response to user feedback, however, it evolves; and the result may not meet the original goals leading to unexpected time and cost. Some risks to evaluate include:

• Past performance history
• Security controls
• Employee training

How Do You Prioritize Based on Risk?

After performing the risk assessment, you must prioritize the risks. For example, a high-risk event could be a data breach or the loss of critical operations. A low-level risk might be a minor budget overrun.

Regardless of your specific prioritization approach, the idea is to rank from low risk to high risk. Focus on prioritizing risks with high impacts and high likelihoods. A risk matrix is an effective tool for prioritization; it lets you chart each risk by likelihood (one axis) and severity (the other axis).

What Is a Risk Matrix?

A risk matrix is a visual tool that provides insight into your organization’s risks and their overall probability and seriousness.

All risk matrices generally follow a standard format. The likelihood of risks happening is charted on the Y-axis and the criticality of their implications on the X-axis. Each axis is scaled up from very low to very high. A risk landing in the upper right corner is highly likely and high impact, deserving the highest priority.

Because of its simplicity, a risk matrix is a valuable tool for communicating with stakeholders.

What Is the Difference Between Prioritizing Risks and Risk Mitigation?

Risk prioritization is just as we’ve already described: the process of ranking risks by the potential trouble they might cause. Prioritization involves whittling down the list of threats to a manageable, scalable list that can be addressed in sequence.

Risk mitigation is the process of reducing exposure to risk and reducing the likelihood of an incident. Risk mitigation activities are guided by your prioritization. Top priorities get attention more quickly, and get more vigorous mitigation techniques. Your top risks have to be addressed on an ongoing basis to assure that your organization is fully protected.

How to Create a Risk Impact Assessment

After creating a list of identified risks, you need to perform a risk analysis, where you review the probabilities and consequences of the risk events occurring. Consider the following factors.

Impact of Risk

Risk impact incorporates qualitative and quantitative reviews. For example, a quantitative measure articulates the potential costs or liabilities arising from a data breach. A qualitative review considers a risk’s impact in broader terms, usually along a low-, medium-, or high-severity scale.

Probability of Risk

Some risks may be high impact, but low probability; others might be high probability but low impact. Again, the likelihood can be reviewed both qualitatively and quantitatively. You can create a qualitative scale such as “highly likely” to “highly unlikely” with various steps in between; then align those to numeric scores that allow a quantitative assessment.

What Is the Risk Management Process?

Once your risk assessment is done, you can choose to accept or mitigate certain risks. This is the risk management process: deciding how to deal with a risk, and implementing the steps necessary to follow through with that decision.

For example, you might define risks of a data breach through one of your IT service providers as high likelihood and high severity. In that case, you might decide to mitigate the risk by canceling an IT outsourcing project and keeping the work in-house. Or you might decide to proceed with the project but take out additional cyber insurance in case of future breaches; or to proceed with the project but include more onerous audit and monitoring requirements on the IT service vendor.

How ZenRisk Enables a Project Manager to Create a Successful IT Project Team

Reciprocity ZenRisk allows you to prioritize tasks so that everyone knows what to do and when to do it. Workflow management features offer easy tracking, automated reminders, and audit trails. The ZenConnect feature allows integration with popular tools, such as Jira, ServiceNow, and Slack, assuring seamless adoption within your enterprise.

ZenRisk also provides valuable templates to document and track your risk management plan. It’s a single source of truth for your risk register, risk assessments, risk ranking, and risk mitigation activities. Insightful reporting and dashboards provide visibility to gaps and high-risk areas. These tools help you understand and communicate your risk landscape more effectively.

Contact us for a demo today for more information about how ZenRisk can streamline your process.