Step-by-step guide to the risk management process

A project is most successful when you plan and manage it effectively. Developing your project management skills and implementing tried-and-true project management mitigation strategies can help. But even the most well-developed projects will have risks.

The best way to prevent project risks is to face them head-on. Proactively planning for these uncertain events with the help of a risk management plan can help you steer your project team into calm waters—instead of getting caught in the middle of an unexpected storm. 

If you’ve never developed a risk management process before, you may have suffered the consequences of unexpected risks on past projects. Learn more about project risk management and try these six easy steps to build your own risk management plan.

What is a risk management process?

In project management, the risk management process is the structured approach teams use to identify, evaluate, and address potential issues that could impact their goals. It's more than a checklist; a risk management process is a proactive strategy for navigating uncertainties.

Every project, no matter how well planned, faces financial risks and operational risks—from missed deadlines to unexpected budget challenges. Without clear risk response strategies, these issues can quickly derail progress, leaving teams scrambling for solutions or explaining delays to stakeholders.

Effective risk management in project management means having a plan to address surprises before they happen. By pinpointing types of risk early, you’ll be prepared, not panicked, when an issue arises. The risk management process also keeps your communication clear with stakeholders, so they’re confident in your team’s ability to handle challenges.

Ultimately, a strong risk management plan doesn’t just prevent vulnerabilities—it gives you control, helping you steer your project smoothly past obstacles and keep everything on track.

Steps of the risk management process

Managing risks in any project requires a methodical approach, but don’t worry—it’s a lot like planning for a big event. Just as you’d prepare for unexpected weather or last-minute cancellations, each step of the risk management process helps you plan for surprises in your project.

Here’s a breakdown of the essential steps, so you’ll know exactly what to focus on at each stage.

Step 1: Risk identification

The first step is identifying every potential risk that could disrupt your project. Think broadly here—issues can arise from internal factors like resource limitations or external ones such as natural disasters. Involving your entire team and engaging with stakeholders provides different perspectives and uncovers possible risks you might miss alone.

There are a variety of ways to begin the risk identification process, including:

• Interview project stakeholders. The best way to identify project risks is to ask stakeholders, leadership, and experts in the topic. If they’ve run similar projects, ask them what risks they ran into and how you can prevent them. Even if they haven’t run similar projects, make sure to check in with key project stakeholders to ensure you’re not missing any important project risks.

• Brainstorm potential risks with your project team. Your project team is who you will be working with on this project day in and day out. Before you get started on your project, ask them what they see as potential risks and consider hosting a brainstorming session to identify serious risks to your project.

• Document and ratify your assumptions. According to the Guide to Project Management Body of Knowledge (PMBOK®), assumptions are anything about the project you think will be true—without being a guaranteed fact. You may base project decisions on your assumptions without even realizing you’re doing so. But by doing so—without documenting and verifying your assumptions—you open yourself up for project risk. If the assumptions you have aren’t actually true, then the foundations of your project may become unstable, which may jeopardize your project success.

• Check your checklists. See if your team or department has built a checklist of common risks. If they haven’t, start documenting one to set yourself up for success on future projects.

• Perform a risk assessment matrix. A risk assessment matrix categorizes severity into four buckets: catastrophic, critical, marginal, and minor. This helps to prioritize which potential risks to tackle first. 

As you identify important risk events, put them into a risk register template. As the name suggests, a risk register is a dedicated list of all of your project risks. With risk identification in place, you set a foundation for the entire risk management process by making sure nothing slips under the radar.

Step 2: Risk assessment

Once risks are identified, it’s time to assess their potential impact and likelihood. Risk assessment helps you determine how severe each risk is and what effect it could have on your project’s success.

Are you dealing with a financial risk that could derail the budget? Or a workflow risk that might cause delays? This step ensures you understand not just project management risks but the depth of their impact, which enables better decision-making moving forward.

Step 3: Risk treatment

Not all risks carry the same weight, and that’s why risk prioritization is key. Here, you rank risks based on their impact and likelihood. High-impact risks, like operational risks that could halt project progress, take precedence, while smaller issues fall lower on the list.

By prioritizing effectively, you’re able to allocate resources and attention to mitigating risks that matter most.

Step 4: Risk response planning

With prioritized risks in mind, it’s time to create your risk management plan. This step includes selecting a risk response strategy that aligns with your project’s risk appetite and specific needs. Options include:

• Risk avoidance: Preventing the risk from occurring by changing the project plan or approach.

• Risk mitigation: Implementing measures for risk reduction to lessen the impact if the risk does occur.

• Risk transfer: Shifting the risk to another party, often through an insurance company or external contract, to manage related risks.

• Risk acceptance: Acknowledging the risk without taking action if it aligns with your organization’s risk appetite and doesn’t threaten project success.

By creating a clear risk mitigation plan for each identified risk, you’re prepared for challenges that may arise, helping keep the project on course.

Step 5: Risk monitoring and control

The risk management process doesn’t stop after planning; continuous risk monitoring is essential. New risks can emerge, and identified risks may evolve, requiring updated strategies.

To do this:

• Send regular status updates so your project team and project stakeholders are all on the same page. Remember: risk management should be proactive—not reactive.

• Check in asynchronously with your individual risk managers. Each risk “owner” should be monitoring their risk event for red flags. As the project manager or team lead, check in with them regularly to make sure everything is going well.

• Keep an eye on your risk register for any updates. If the likelihood of a risk changes or the risk plan is updated, that change should be reflected in your risk register. Like most elements of project management, your risk management plan should be a living document that your team uses to stay on track.

Monitoring helps you stay agile, ready to adjust as needed. A risk that seemed minor in the beginning might grow, or risk exposure could change based on project conditions. By actively controlling and reviewing risks, you stay in command of the project’s direction.

Step 6: Risk communication

The final step is communicating risk-related information across the team and with stakeholders. Risk communication ensures that everyone understands the risk management plan, their roles in it, and any adjustments made during the project.

Open communication fosters transparency, keeps stakeholders informed, and strengthens team commitment to managing risks effectively. After all, a risk is easier to manage when everyone is aware of it and actively working to mitigate its impact.

Get started on your risk management process by browsing our template gallery or building your own custom method.

How to develop a risk management plan

A solid risk management plan is the backbone of any successful project. It’s your go-to document for handling financial risks, operational risks, and everything in between.

Here’s how to build one that keeps your risk management process top of mind and responsive to any surprises. Let’s use the example of launching a new mobile app to illustrate each step.

1. Defining objectives and project scope

Start by clarifying your project’s objectives and scope—this foundation will guide every decision in the risk management process. When your team understands the project's goals and boundaries, they’ll have a clearer sense of which types of risk could impact progress. Think of this as setting up guardrails to keep everyone on the same page.

Example: For our mobile app launch, the objectives are to go live within six months, stay within the set budget, and deliver a user-friendly experience with minimal bugs.

The project scope covers everything from design and development to testing and a limited marketing rollout. These defined boundaries help the team respond to potential risks that might interfere with these goals.

2. Identifying risks in the planning process

With objectives and scope in place, the next step is identifying risks. Engage your team to think through potential risk events—from financial risks to natural disasters—that could affect your timeline, budget, or resources. This step of the risk management process involves anticipating the related risks that you’ll need to manage.

Example: For the app launch, identified risks might include:

• Technical issues: Bugs or performance issues could delay launch.

• Financial constraints: Unexpected costs may arise, such as additional testing or last-minute updates.

• Resource limitations: Staff turnover or competing projects might lead to delays or reduced productivity.

3. Assigning clear roles and responsibilities

Every effective risk management plan assigns clear responsibilities. Define who will oversee risk assessment, manage the risk register, and lead risk mitigation efforts. By assigning roles, you ensure accountability and streamline decision-making in response to risks, so everyone knows what to do when a challenge arises.

Example: For the app launch, the roles might include:

• Project manager: Oversees the entire risk management process and updates the risk register.

• Lead developer: Monitors technical issues and manages risk mitigation for bugs and performance.

• Financial analyst: Tracks project spending and addresses any financial risks.

4. Refining the risk management plan

Once roles are established, it’s time to refine the plan. This involves aligning your risk treatment with the project’s risk appetite and goals. Here, you’ll fine-tune strategies like risk reduction or risk avoidance to fit the specific risks identified. This step allows you to customize the plan to meet the unique demands of your project.

Example: For the app, the team might decide on:

• Risk avoidance by excluding complex features that could delay the timeline.

• Risk mitigation by scheduling additional testing phases to catch bugs early.

• Risk transfer by partnering with a third-party developer for specific features.

5. Using risk management plan templates

Using a risk management plan template can simplify the process and ensure you don’t miss critical steps. Templates often include pre-structured sections for risk identification, risk analysis, and response plans, saving you time and offering a proven framework to follow. Many templates also help you track risk exposure over time, keeping the plan organized and easy to update.

Example: The team selects a template that includes fields for risk description, probability, impact, and assigned owner. This makes it easy to log each identified risk and monitor its status as the app development progresses.

Risk management frameworks

A risk management framework provides the structure needed to approach risk consistently across projects. Common frameworks guide organizations through the process and help align team efforts with broader goals. Here are a few well-known options:

1. ISO 31000: Offers a global standard that focuses on risk principles and a structured process adaptable to various industries.

2. COSO: Emphasizes managing risk to improve performance and align strategies with objectives.

3. NIST: Commonly used in technology and cybersecurity, focusing on protecting information and assets.

Selecting a risk management framework depends on your project’s size, complexity, and industry requirements. Each framework offers unique strengths that can help your team tackle risks confidently.

Challenges in the risk management process

Even a well-prepared risk management plan faces hurdles. Key challenges include:

• Identifying risks early: Spotting potential issues can be difficult, especially with unforeseen operational or financial problems.

• Maintaining an updated risk register: Keeping the register current requires dedicated attention and regular updates.

• Effective communication: Ensuring stakeholders stay informed can be demanding and time-consuming.

• Sustaining commitment: Getting the team to stay engaged in risk management can be challenging under tight deadlines.

Addressing these challenges with clear communication, regular monitoring, and the flexibility to adapt strategies will support a smoother process.

Best practices for an effective risk management process

Strengthening your approach to risk management involves:

• Involving stakeholders early to get a broad perspective on possible risks.

• Using a risk register that tracks and prioritizes concerns effectively.

• Reviewing and updating the plan regularly to address new issues as they arise.

• Matching response strategies with the team’s goals so decisions remain aligned.

Following these practices helps teams stay proactive and adaptable, ready to respond confidently to whatever challenges come their way.

The goal of project risk management

Implementing a risk management plan can help prepare your team for unexpected events. But truthfully, not every project needs an in-depth risk management plan. If your project is relatively straightforward, you might just need a quick chat with your team members to brainstorm and address any potential risks. 

These projects are small in scope, don’t take up a lot of team member time or outside resources (like budget or bandwidth), and may be processes you’ve successfully completed before.

If you’re working on a complex initiative that involves a lot of cross-functional project stakeholders and important resources, you’d benefit from a project risk management plan. These are projects where you may be investing a significant amount of team member time and bandwidth or preparing a large financial investment. With a risk management plan, you can ensure the project stays within the project scope and, ultimately, succeeds.

Incorporate project risk management into your next project planning session

Successful projects have great plans—and risk management is a key to that early-stage planning process. Make sure to incorporate your project risk management strategy into any early-stage planning documents, like your project brief. That way, everyone has access to your risk management plan and they can proactively react to any high risks that do occur.

For more project planning guidance, find out how Asana can help you track goals, define milestones, and communicate all in one place.

FAQ: Risk management process

What is a project risk management plan?

A project risk management plan is a document outlining how your team will identify, analyze, and respond to risks that could affect your project. This plan focuses on risks that haven’t yet occurred, allowing for a proactive approach to potential challenges.

What’s the difference between a project risk and an issue in project management?

A project risk is something that could impact a project’s success by delaying the timeline, increasing costs, or affecting performance. In contrast, a project issue is a problem that has already impacted the project. Addressing issues is reactive, while managing risks allows for proactive planning to keep the project on track.

How can a risk management plan keep a project on track?

With an effective risk management plan, you can prepare for potential risks that may arise throughout the project’s lifecycle. By identifying and addressing these risks in advance, your team can stay on schedule, within budget, and aligned with project goals.

When should I use project risk management?

Ideally, a project risk management plan should be created during the planning phase. Early planning helps you identify possible risks, assess their potential impact, and monitor them throughout the project. For projects already underway, consider the theory of constraints to help pinpoint and address any weak points or ongoing risks effectively.