Managing Unknown Risks in Project Management

In project management, risks are uncertain events or conditions that, if they occur, can positively or negatively affect project objectives. Risks can be categorized as known or unknown, depending on whether they can be identified and assessed before the project begins. Known risks can be planned for and mitigated, while unknown risks are more challenging to manage as they cannot be anticipated.

Identifying and Managing Unknown Risks

Unknown risks are inherent in any project, and it is impossible to eliminate them entirely. However, there are steps that project managers can take to identify and manage unknown risks, thereby reducing their potential impact on the project.

Identify and Document Assumptions

The first step in managing unknown risks is to identify and document all assumptions made during the planning phase. Assumptions are statements that are taken to be true without proof or investigation. By identifying and documenting assumptions, project managers can better understand the potential risks associated with them.

Develop a Contingency Plan

Once unknown risks have been identified, project managers should develop a contingency plan. A contingency plan is a set of alternative solutions and paths forward that can be implemented if an unknown risk occurs. By having a contingency plan in place, the project team can adapt to the change more effectively and minimize the impact on the project.

Include Contingency in Project Cost and Schedule

It is good practice to include contingencies in both the project cost and schedule. Contingencies are amounts of money and time that are set aside to cover unexpected costs or delays. By including contingencies, project managers can ensure that the project has the resources it needs to respond to unknown risks.

Responding to Unknown Risks

When an unknown risk occurs, project managers should take the following steps to respond:

Understand the Root Cause of the Issue

The first step in responding to an unknown risk is to investigate and understand the root cause of the issue. Sometimes, the issue may seem large and unsolvable, but finding the root cause can lead to a more appropriate solution.

Communicate and Update the Team

Regular communication with the project team is crucial when managing unknown risks. Keeping the team updated on the progress and challenges faced helps establish trust and credibility. Project managers should also be transparent about the risks and the steps being taken to mitigate them.

Document the Experience and Solution

After managing an unknown risk, it is important to document the experience and solution. This helps future projects avoid similar risks and provides a better understanding of the unknown risk for other projects.

By following these steps, project managers can effectively manage unknown risks and minimize their impact on the project.

References

1. Mudassir Iqbal, “Known Risks and Unknown Risks – PMP/CAPM,” Mudassir Iqbal, April 14, 2019, https://mudassiriqbal.net/known-risk-and-unknown-risks/.
2. “Unknown Unknowns: How To Manage Risk Against the Unexpected,” Veritas Total Solutions, n.d., https://info.veritasts.com/insights/unknown-unknowns-how-to-manage-risk-against-the-unexpected.
3. Clinton M Padgett, “Managing Known And Unknown Unknowns,” Forbes, June 21, 2021, https://www.forbes.com/sites/forbesbooksauthors/2021/06/21/managing-known-and-unknown-unknowns/.

FAQs

1. What is an unknown risk?

An unknown risk is an uncertain event or condition that cannot be identified or assessed before the project begins. Unknown risks are inherent in any project and can have a significant impact on the project objectives.

2. How can I identify unknown risks?

Unknown risks can be identified by conducting a thorough risk assessment, brainstorming with the project team, and reviewing historical data. Assumptions made during the planning phase should also be carefully examined, as they can be a source of unknown risks.

3. How can I manage unknown risks?

Unknown risks can be managed by developing a contingency plan, including contingencies in the project cost and schedule, and communicating regularly with the project team. It is also important to understand the root cause of an unknown risk when it occurs and to document the experience and solution for future reference.

4. What is a contingency plan?

A contingency plan is a set of alternative solutions and paths forward that can be implemented if an unknown risk occurs. By having a contingency plan in place, the project team can adapt to the change more effectively and minimize the impact on the project.

5. What is the difference between a known risk and an unknown risk?

A known risk is a risk that can be identified and assessed before the project begins. An unknown risk is a risk that cannot be identified or assessed before the project begins.

6. How can I include contingencies in the project cost and schedule?

Contingencies can be included in the project cost and schedule by setting aside a certain amount of money and time to cover unexpected costs or delays. The amount of contingency should be based on the level of risk associated with the project.

7. Why is it important to communicate regularly with the project team about unknown risks?

Regular communication with the project team is important to keep the team informed about the risks and the steps being taken to mitigate them. This helps to establish trust and credibility and ensures that the team is prepared to respond to unknown risks when they occur.

8. Why is it important to document the experience and solution for an unknown risk?

Documenting the experience and solution for an unknown risk helps future projects avoid similar risks and provides a better understanding of the unknown risk for other projects. This information can be used to improve the risk management process and make projects more resilient to unknown risks.