You would often hear project managers using issue management and risk management interchangeably. However, did you know that these two concepts are entirely different and need to be handled differently?
A skilled project manager should oversee issue and risk management and have strategies to deal with everything while adapting to changing situations. Learning about these two terms won't only help you in your project management but also boost your business career.
Now, let's focus on key differences and learn what sets them apart.
What is the risk management process?
Risk management is a rather broad topic and involves various processes. Managers will need to identify, monitor, and manage potential risks and their impact on business. Some examples may include natural disasters, system failure, security breaches, hacker attacks, and data loss.
A risk management plan will enable you to understand and control risks to make more informed decisions while accomplishing your business objectives.
Every organization needs to be able to identify risks to take appropriate steps and prevent them from happening. It's also crucial to understand risks because, with every new project, a new threat comes along. Therefore, if you have a successful risk management strategy, you can identify the project's threats, opportunities, weaknesses, and strengths.
A risk management plan includes the following steps:
- Get to know the context: the company needs to understand the context in which the remaining risk management processes will occur. Moreover, the company needs to develop criteria based on which they will estimate potential risks and define the analysis structure.
- Identify risks: as we mentioned earlier, an organization should identify and define potential risks that might affect their company in a bad way.
- Analyze risks: after identification, you must determine the odds or how likely the potential risk will occur and what will happen if they occur.
- Mitigate risks: an organization will determine the highest-ranked risks and work on a plan to mitigate these risks by applying a specific risk control.
- Monitoring risks: this includes following the current risks and watching out for the new ones.
Why is risk management important?
Everyone gets to experience the risk. Every company faces risk, and sometimes we have to embrace the risk to accomplish success. Risk management aims not to eliminate the risk but to minimize its consequences. Your team members will learn to make smart risk decisions by working with a risk manager.
It makes jobs safer. Risk managers primarily focus on safety and health. They actively look for problem areas within the company and find ways to address them. They also use data analysis to identify injury or loss and apply strategies to prevent them from happening. This clearly helps their team members and other employees feel safer.
It contributes to project success. Regardless of the department, risk managers help employees complete their projects. Employees will be able to identify risks early on and reduce the severity and likelihood of potential project risks.
Risk management minimizes unexpected events. People don't like surprises, especially when it impacts their organization. A risk manager's job is to map out potential risks and then prevent them or find the best ways to manage them. It's impossible to address every risk scenario, but risk managers try to lessen these surprises.
It saves time and effort. When an incident happens, employees will have to report to the risk management department. However, these reports are often done inefficiently. A risk manager should be the first place employees turn to when something serious happens.
Issue management represents a process of addressing problems that happen throughout a project or within a company. When an issue arises, it's crucial to address it as soon as possible to limit the negative impact. To stop this from happening, project managers will implement a framework that addresses any issue that might occur while researching the best possible solution.
The most common issues include:
- Issues with suppliers, like not receiving a response
- Tech issues, communication software not working
- Bad communication among team members, such as lack of meetings or language barrier
- Project exceeding deadline or budget
- Team members lacking experience
Project managers will use issue management during the majority of projects. First, they will develop a framework before the problem happens and then apply it when an issue arises. This framework can be applied to issues of all sizes, considering it enables a more organized approach.
Another way to apply issue management is to use it for issues that happen within a company. For example, a manager may develop an issue management system that his team members or employees use to record issues they experienced during work, like software issues or slow internet connection.
Can a risk become an issue?
We first need to explain the difference between risk vs. issues in project management to answer this question. Once a potential problem turns into a real problem, the risk becomes an issue.
The issue already happened, while the risk is a potential issue that might or might not occur and can affect the project in various ways, positively or negatively.
So, risk will definitely become an issue at some point, and it's the project manager's job to deal with this issue the best way they can.
Difference between risk and issue
How do we make a difference between risk and issue management? These two represent an important part of the planning and management process; therefore, it's crucial to understand the differences to plan your business strategies effectively.
Time. The significant difference between these two is the focus and timeline. Risk relies on the future, so it's unlikely that project managers can create strategies for it. On the other hand, an issue is something that has already happened or is happening at the moment. This is something project managers can address in a timely manner.
Impact. The next thing that sets apart risks from the issue is their potential impact. Risk can be a challenge or an opportunity depending on a project or a risk. However, when it comes to issues, it challenges current projects. This is an obstacle for project managers.
Approach. When dealing with issues and risks, project managers assume different approaches. For example, they can plan to avoid risks altogether or choose to retain a minor risk if its cost is insignificant. Some common management issue approaches include planning, prioritizing, and communication. Project managers will review and refine their business plans when faced with an issue. They may also focus on creating alternative solutions or prioritize issue components to create a short-term and long-term plan. Lastly, communication and collaboration are crucial assets in issue management. For instance, a project manager might create new tasks and tell a production team what they expect from them.
Documentation. While risk management uses a risk log or register to track data, issue management uses an issue log or issue register.