Risk Management in Consultancy Projects
Published: 24/02/2025
Free trial
See for yourself how you can save time and money. Enter your details below for a free 30 day no-obligation trial.
In this article, we will be looking into the importance of risk management in consultancy projects. On top of that, we will help you create a plan that will help you keep your projects on track at all times.
No project is without a risk. At any moment, things can just go awry, causing setbacks and unaccounted costs. Naturally, it’s a disastrous thing for any business, but it can be particularly bad for consultancies who run projects for their clients. The inability to address issues in an effective and timely manner poses more threats than financial losses to them. To client-oriented consultancies, the inability to foresee, evade or ease the risk can cost reputation and future opportunities.
Risk management is crucial for any business, not just consultancies. However, it tends to get overlooked, leading to businesses playing a rhetorical Russian roulette. If all goes well, they are lucky. If things take a turn for the worse - they will be left to scramble by. This, on its own, is a risk you shouldn’t take. So, let’s explore how to add risk management to your strategy.
To avoid getting overwhelmed, let’s start breaking risk management into five key steps:
Identifying the risk;
Analysing its nature and origins;
Risk evaluation based on its impact;
Creating an action plan to avoid or minimise the risk;
Keeping track of whether risk aversion is successful and recording the results.
Although all steps are equally important, the 1 and 3 are normally the trickiest. This is why they are the focus of this article.
The first step in developing a risk management strategy is identifying the risks. It can be daunting, especially if you’re not sure what to look for. In this section, we will share some tips on how to grasp the basics of mapping out potential risks.
There are two key parts when it comes to risk management: recognising the risks and prioritising them based on their impact on the project flow. The former can be tricky and prone to mistakes if you’re relying on assumptions and guesses. Instead, you are advised to turn to previous data, especially past projects that were similar in nature. This will highlight the issues you’ve run into before, putting them on your radar as potential risks. Additionally, if you have fewer resources for the new project, you’ll be able to raise that as a potential issue. Identifying risks gives you the opportunity to prepare for them ahead of time, which will either help you avoid them entirely or soften the impact without jeopardising the flow of the project or the quality of its deliverables.
But not every risk is equal. Some may appear to be a big deal due to how complex they are to solve. This is why it’s important to determine how impactful the said risks are on the project timelines - otherwise, you may end up wasting a lot of time tackling the issues that wouldn’t cause as much harm if left for later. Prioritise risks that bring viable consequences fast and remember - sometimes, they are the quickest ones to resolve.
Another benefit of analysing past works is being able to notice the gaps in your approach. Part of risk management is filling them in before you get started. The difference between risks and gaps is that the former is more defined and is normally tied to one aspect. A gap, on the other hand, has the potential to breed many risks and come in different forms. For example, you may have a gap in your setup, your process or your team.
Sometimes, gaps get overlooked as they have not historically caused problems bigger than an inconvenience. However, you should try to bridge as many of them as possible because gaps are a ticking time bomb. The risks that come from them are usually unpredicted, stripping you of the opportunity to prepare and having to act when the problem arises. The good news is that filling in the gaps is a much easier task than implementing damage control further down the line.
The third stage of risk management in consultancy projects is creating an action plan. Namely, how to avoid the risks or to reduce the harm inflicted. Given that you have already identified the threats, it may seem like a no-brainer. But careful! You might be missing some crucial details, and a risk mitigation plan may help you protect your blind spots.
No matter how thorough your project plan is and how positive the forecasts are, there will always be road bumps. Planning for them is an essential part of risk management - unforeseen issues are almost guaranteed to occur. Which, on its own, is not the biggest danger. How you address, handle and resolve them, however, is. For this reason, flexibility should always take one of the leading roles in your strategy; you need to be able to shift resources and plans around when there’s the need to.
Shifting tasks focused on administrative tasks, such as data transfers to digital tools, can save you time and, therefore, grant you the flexibility you need. Additionally, when the forecasts and plans are built using the tools, the risks are normally already accounted for. In other words, even if you can’t predict what kind of issues will arise, you will have an outlet to address them both quickly and efficiently.
Prior to starting the project, it’s vital to assess the resources you have on hand. Namely, pay close attention to the people you have available and their skillsets, automation tools, project management solutions and collaboration platforms. Understanding what you work with, alongside potential risks, will help you map the project out in a way that helps you minimise the number of difficulties you run into or at least soften their impact. Additionally, it is likely to better the overall flow of the project.
Visibility of your resources may also reveal additional risks you didn’t take into consideration. For example, if you don’t have a good collaboration platform, you will run into a risk of repeated tasks and gaps in communication, as well as potential delays due to back-and-forths. Having a centralised view of what’s at your disposal will help you fill in the gaps and craft a plan with not just reduced risks but also enhanced efficiency.
The preparation and initial risk management are important, but don’t think your effort ends there. As we’ve already discussed, things can go wrong at any stage of the project, especially when you don’t expect them to. For this reason, it’s essential to remain vigilant at all times. And it’s a much easier task than you think.
Just because you’ve created a plan in which your project will avoid the risks doesn’t mean things will go according to it. To make sure things don’t go awry midway through, you will need to carry out regular risk assessments as the project progresses. However, as every project contains many moving parts, it’s difficult to incorporate yet another element, and thus it is often forgotten. Which is a mistake that poses a big risk.
There is a solution, however, and it doesn’t require too much effort. The key to risk assessment is remaining aware and on top of things at all times and identifying potential issues before they become a threat. Digital solutions, such as Timesheet Portal, come equipped with reporting tools that will help you do exactly that. Not only can you customise them to show the exact data you need and generate them on demand, but also automate the reports coming straight to your inbox on the assigned days. All that’s left for you is to analyse them and act accordingly. With many steps taken out of the process, staying vigilant becomes easy and thus, risk assessment becomes an easily incorporated part of your project flow.
Risk management in consultancy projects is your key to maintaining your reputation with the clients and delivering top-notch services even when things go wrong. There are five stages to risk management, but the trickiest is the first - identifying the risks. Beyond the ones you can think of, there are still plenty of them lurking within the gaps in your strategy, setup and processes. By finding the said gaps and filling them in, you will not only discover those potential risks but also prevent them from causing issues in the future.
Creating an action plan is the second on the list. Having analysed the risks and their impact on your project, you should have a clear idea of which ones to prioritise. However, it’s important to stay flexible as unforeseen issues may arise. Equipped with the right digital tools, you will grant yourself an opening to move the resources around with ease, as well as keep your finger on the project’s pulse at all times. With a wiggle room a constant visibility of your progress, you’ll be prepared for both foreseen and unexpected risks, ready to handle them accordingly.
What is your risk management looking like? Let’s assess it together.