MGMT 440 IP 4

Risk Reporting

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Introduction

As a project manager, you must communicate with confidence, clarity, and

comprehensiveness. Your ability to communicate a project’s risk will

demonstrate your comfort level of managing risk and will ultimately influence

how others approach risk management.

Effectively communicating risk requires sharing information about risks with

all relevant parties. The project manager’s responsibility is to monitor a

project’s risks and provide updates about project risk conditions to the

project sponsor, stakeholders, team members, and any other individuals

identified in the project’s communication plan. As a project manager, you will

need to decide what information gets communicated and to whom it is

communicated because not all information is necessarily reported to all parties.

Risk Reporting Throughout the Project

Risks are identified and assessed, and the appropriate action plans are

created during the beginning of project planning. However, this does not

mark the end of risk management. As a project evolves, the identified project

risks may change or disappear, and new risks may develop. Furthermore, any

anticipated risks may occur and the designated action plans will need to be

implemented.

The project manager’s role is to constantly assess the project’s risk condition

and periodically confirm with key stakeholders that the project’s risk level remains acceptable.

Risk Reporting to the Stakeholders

Ultimately, key stakeholders and project sponsors are interested in the

impact of risk on the project’s schedule, budget, resources, and quality.

Throughout the project, you will be responsible for updating stakeholders on the overall project status by addressing the following questions:

What anticipated risks occurred and what actions were taken to

address these risks?

What effect did these actions have on the overall project? Was the

desired outcome achieved? Why or why not? If not, what was done to

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achieve the desired outcome?

What new risks have been identified, and what action plans have been

mapped out to address these risks should they occur?

How have risks changed and what changes were made to the action

plans to reflect these modifications? How has the overall project risk situation changed?

Frequency of Risk Reporting

Project risks should be reported with every regularly-scheduled status period. The project’s status schedule will depend on the following:

The duration of the project: A shorter schedule might mean tighter

project deadlines and, therefore, more frequent project reporting.

The phase of the project: As the project gets closer to major

milestones, there is a greater impact if risks occur; that requires more

frequent monitoring of risk.

The risk of the project: A project having a higher probability of risks

or greater amount of risks will require more frequent monitoring of

risks.

The visibility of the project: If upper management has a vested interest in a project, they may want more frequent project updates.

Obviously, when any new or changed risks are identified that have the

potential to significantly impact the project budget, schedule, resources, or

quality, the project manager must notify the appropriate stakeholders

immediately.

How to Communicate Risk

Ultimately, the method of communication used will be defined by the

organizational culture, the urgency of the information, the project’s

characteristics, and the nature of the information that is being

communicated. Furthermore, a project manager’s relationship with his/her

audience will also determine the communication method used. For example,

the project manager may communicate project risks differently with project

team members or project sponsors than they do with the project customers or stakeholders.

Some guidelines to follow when using the various communication

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mechanisms include the following:

Face to face: This is the preferred method of communicating risks or

building relationships. It is critical when relationships are being

established, negative news must be shared, problems require quick

resolution, collaboration is necessary, etc.

E-mail: This is optimal for when documents must be reviewed, an

immediate response is not necessary, or major/complex issues are not

being addressed, etc.

Phone call/Audio Conference/ Web Conference: These are other

forms of non-face-to-face, real-time conversation mechanisms. They

are appropriate to use when project members are dispersed across

multiple locations, a quick update to the project team is necessary,

there is little need for brainstorming or group collaboration, and the

participants on the call know one another.

Voicemail: This is never an appropriate mechanism for

communicating risk. Risks should be documented and communicated

personally to address the recipient’s questions and/or clarify any

misconceptions.

Instant Message (IM): This is never an appropriate mechanism for

communicating risk. Risks must be documented, and the IM tool does not lend itself to easy recordkeeping.

Summary

Communicating project risk is critical to the project’s overall success. The

project manager must be adept at communicating with individuals across

various levels of the organization both internally and externally. Moreover,

they must recognize when to escalate project risk issues to key sponsors and

stakeholders and determine the appropriate communication medium to use.