How to Monitor Risks in Project Management: This Is What Professionals Do
Managing projects means learning how to handle positive and negative risks efficiently. As a project manager, you need to understand how to monitor project risks to avoid and mitigate threats while taking advantage of opportunities. Monitoring risks is crucial for effective project management. Learn more about the Monitor Risk PMP process and learn from Project Management Academy about how professionals identify, prepare for, and monitor risks.
On this page:
- What is the Monitor Risk process?
- Inputs and requirements to monitor risk
- How to monitor risk: tools & techniques
- Outputs from the Monitor Risk process
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What is the Monitor Risk process?
Unfortunately for project managers, you can never fully anticipate or control risks during a project’s lifecycle. However, as a project manager (or PMP), it may be helpful to identify risk trigger events and use the Monitor Risk process to prepare for both threats and opportunities.
As part of monitoring risks, you will need to identify and track risks, monitor for risk triggers, design and implement response plans, react when new risks occur, and measure your effectiveness to improve risk management processes. We will review the following inputs, outputs, tools, and techniques as we dive deeper into understanding the Monitor Risk process:
|Tools & Techniques
|>Project management plan
>Risk management plan
>Work performance data
>Work performance reports
>Technical performance analysis
|>Work performance information
>PM plan updates
>Project document updates
>Organizational process asset updates
Inputs and requirements to monitor risk
It is almost impossible to anticipate and control every risk during your project. Your best option is to review all inputs and requirements thoroughly to anticipate as much as possible for risks.
Risk Management Plan
Your risk management plan is your guide to dealing with project risks. This plan should outline:
- Risk management approaches, tools, and methodologies
- Roles and responsibilities for project team members dealing with risks
- How to create time and cost contingencies in your plans to manage risks
- Project-specific risk categories
The other inputs described below all play a role in your overarching risk management plan.
The project risk register is a crucial document you create during the Identify Project Risks process and update throughout the project lifecycle. Besides listing any known project risks, this document contains other information like probability, impact, and risk triggers.
Your risk report is a snapshot of identified risks, responses, and owners at a given time during your project’s lifecycle. It should include information such as who will take control of implementing a risk response plan and the agreed-upon risk response they will implement if a risk event occurs.
Risk-related data and performance reports
Document information well as you gather or update risk-related data and project performance reports. These can include:
- Earned value (EV)
- Planned value (PV)
- Schedule variance (SV)
- Cost variance (CV)
- Estimate at completion (EAC)
- Estimate to complete (ETC)
- To-complete performance index (TCPI)
Examples of these PMP formulas can be found in the video below:
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How to monitor risk: tools & techniques
Project managers (even PMP credential holders) need to be equipped with the proper tools and techniques to help them to monitor and control project risk effectively.
Reassessing project risks
Regularly reviewing and reassessing your risk register can help you determine if any risk information has changed or evaluate the status of risk triggers. Risks can become irrelevant, their probability or priority levels could change, or new risks may arise as your project progresses.
Keep your risk register and project stakeholders updated as you reassess project risks, and ensure you work with the project team to reassess risks regularly.
Auditing for risks
Are you examining your effectiveness at managing project risks? Bringing in a team or individual assessor to conduct methodical risk audits can help ensure a thorough, timely risk monitoring and response.
Performance analysis is similar to analyzing risk trends because you are evaluating actual and planned project performance. In this case, you should review project milestones and deliverables to ensure no risks have been overlooked. Analyzing your project performance allows you to quickly address changes and new risks.
Reserve budget & schedule analysis
During the Determine Project Budget process, you should have established a reserve budget and schedule. This reserve includes any time or money set aside ahead of time to address any potential risk events that may occur during the project. It should only be used to mitigate or respond to project risks.
Throughout your project life cycle, you should regularly monitor and analyze your remaining cost and schedule reserves. If your reserves are running low, you may need to plan and execute preventative actions to better mitigate project risks or secure time or funds from your project sponsors.
Project team and stakeholder meetings
Meeting with your project team members and stakeholders is not just for your project’s planning stages. You should meet regularly to review risk data and update risk management strategies as needed.
Regular risk management meetings serve the dual purpose of keeping your team and stakeholders informed while allowing them to contribute to risk mitigation and response.
Outputs from the Monitor Risk process
What does the Monitor Risk process drive in project management? Here are some of the outputs this process helps feed.
Work Performance Information
When you analyze work performance data, the resulting work performance information can help you evaluate the effectiveness of your risk response planning and implementation.
You, your stakeholders, or your project team may submit change requests to the Change Control Board (CCB) or project management team in response to risk analysis. These requests can help the project team determine what appropriate preventative or corrective actions are needed, which may ultimately result in a change request being approved.
PM Plan, Project Document, and OPA Updates
Your change requests may require updates to your various project management plans, including cost, schedule, quality, and scope baselines. You may also need to update project documents, such as:
- Assumption log: learning more about project risks may change, negate, or create assumptions about the risks.
- Risk register: any new information you gain or assess about project risks should be logged and updated in your risk register.
- Technical documents: if your technical approach to producing project deliverables is affected by project risks during the project lifecycle, you will need to update technical documents to reflect changes to relevant procedures.
- Organizational process assets (OPAs) can include project plans, risk response plans, lessons learned, policies and procedures, performance reports, and other documents, templates, and guidelines. These should also be updated as needed.
The way you monitor risk can be an intuitive part of being a project management professional (PMP). Even if you are not equipped with proper PMP knowledge, you will still be inclined to keep an eye on threats and opportunities that could affect your project. Studying this process for the PMP exam helps ensure your approach to monitoring risks is proven, systematic, and comprehensive.
Learn more about risk management for the PMP exam. Interested in gaining professional credentials to demonstrate your expertise in project risk management? Take a Project Management Academy training course for the PMI-RMP or PMP certification today.
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