How To Create A Risk Register (With Risk Examples)
By Indeed Editorial Team
Published 4 November 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Project managers use various management tools for the timely execution of project deliverables. A risk register is essential to help them identify, analyse and monitor risks that can affect the project outcome. Understanding this register and the risk management process can help you with successful project implementation and team management. In this article, we define a risk register, list its components, explain how to prepare one and give examples of common project risks.
What Is A Risk Register?
A risk register, or risk log, is a project management tool that records the details of all identified risks in a project. It helps project managers in analysing risks and planning risk management strategies. In project management, a risk is an unexpected factor that can affect the result of a project. Project risks can include delays in project deliverables, disruptions in material supply, inclement weather and lack of labour supply. A risk log allows project managers to define the severity of the risk and plan mitigating actions to meet project deadlines on time.
Components Of A Project Management Risk Log
A risk log is typically in tabular form with rows and columns. It defines each potential risk and includes solutions. A project manager usually prepares this record, but other team members can regularly update it to track the risk status and implementation of mitigation plans at different project stages. Generally, a risk log consists of the following components:
Identification: This is often the first column in a risk log where you refer to a risk by its number and name. You can also include the identification date.
Description: In this part of the log you can briefly describe the type of risk in a few sentences.
Category: In this section you classify the risk into one of various categories, such as internal, external, labour-based, material-based or natural disaster.
Severity: The risk log defines the severity of a risk based on its impact and the probability of it occurring. Risk managers might assign a number on a scale of 1–10 to measure its severity and classify it as low, medium or high.
Impact: The risk impact describes the potential losses a business might incur because of a risk. This part of the log provides details about how the risk might affect the project outcome in terms of investments and delays.
Rating: Project managers may prioritise a risk based on how likely it is to happen. The rating determines which risks are high and low priority.
Action: This section details the necessary steps to take to mitigate risk and predicts at what stage the risk might occur during the project timeline.
Responsibility: This section assigns the risk monitoring task to a particular person. Sometimes, companies might appoint specific risk managers, but this is less likely for minor projects where anyone from the team may be responsible for risk management.
How To Create A Risk Log
A risk log typically contains information about potential risks associated with a project. Companies might use risk management software to create a risk log, or project managers can design one using a spreadsheet. You can follow these steps to prepare a risk log for your project:
1. Identify risks
The first step is to list all the potential risks that can affect the project. You can study the past projects the organisation you work for or discuss risk management with your clients and team members to collect comprehensive data about prospective risks. Consider creating different risk categories to identify every potential risk in your project, such as market conditions, resource availability or employee efficiency. Risk types can change based on the project. Communicate with all the stakeholders to ensure you include every risk on the log.
2. Provide risk description
After identification, use two or three sentences to provide a concise overview of the risk, including why it is a potential issue. This can help others in your team to understand the risk impact. Try to use keywords associated with the risk factor to highlight their impact on the project outcome.
3. Estimate risk impact
An accurate impact analysis can help you prepare a better contingency plan for risk mitigation. It might be beneficial to categorise risks based on their probability of occurring during the project timeframe. Consider everything that can influence the risk factors. For example, there may be layoffs in the software manufacturing industry or a shortage of raw materials. You can study the market conditions of suppliers for a better risk impact analysis.
4. Outline a risk response plan
A risk response plan is your step-by-step process of risk management and can be a guide during risk mitigation. For example, if there is a potential risk of losing resources due to fire or natural disaster, your action plan can include steps such as contacting the insurance company and informing on-site employees about emergency procedures. For added detail, you can also include how long it might take to overcome the risk. If your response plan requires a lengthy description, you can provide a link in the risk log to a separate document.
5. Assign risk ownership
Once you have identified, reviewed and analysed the risk, you can assign the risk mitigation deliverables. Risk ownership includes the person responsible for overseeing the implementation of mitigation or action plans and any additional personnel responsible for handling the risk operations. You can assign risks to specific team members based on their expertise in risk management. With risk ownership, you can quickly execute the contingency plan and manage the risk when it happens.
6. Track your risk status
Tracking risk status might be essential to determine the risk impact and review the project deadline. The risk status field can help in communicating whether your team succeeded in mitigating a risk. For accurate risk tracking during the project timeline, you can designate the risks as open, closed or in progress. To be more specific, you can assign the status as active, on hold, inactive or complete. Risk tracking may improve the business process, enable better budgeting and allow project managers to meet deadlines without significant challenges.
Potential Risk Scenarios
Although the risk category and severity might vary depending on the type and project size, there are a few risks that can occur frequently. Here are a few scenarios that might help you understand the process of risk analysis:
Data security is an essential part of project management. Companies often store their project data, designs and other important information digitally for quick access, but a malware attack might result in theft or loss of data. It might help in risk mitigation if project managers store multiple copies of their data on different systems. Minor projects may not have data risk, but it is advisable to consider data security as a potential risk to safeguard confidential project information.
A proper schedule determines the execution of project deliverables. Scheduling errors might create confusion among team members and delay the overall project. Communication issues within a team may result in delays in scheduling and the delivery of daily tasks. Project managers can speak with team members and plan a schedule based on the availability of staff during work days.
Project deliverables can increase due to client demands, design errors or scheduling errors. Project managers can add an extra time slot in the project timeline for unplanned work. Delegating tasks properly and ensuring employees do not overwork might help manage unplanned work.
Market risk occurs when there is a recession or supply chain disruption. Companies might not receive raw materials on time, and there may be sudden cost increases or payment delays. It might be difficult to predict such occurrences in the risk log, but market risks can affect long-term projects that depend on the supply of raw materials. Companies can take out bank loans to avoid project delays due to price increases and can contact multiple suppliers instead of depending on a single one for the project's needs.
Sometimes, projects can face legal risks because of regulatory compliance, litigation against the company or plagiarism complaints by competitors. These risks are typically predictable, and organisations may set aside legal costs during risk planning to mitigate such risks if they occur. Legal risks can affect a company's reputation and result in governance issues. In such cases, businesses hire a public relations team for risk management.
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