Generally speaking, no project gets executed the way it was actually planned. If this already applies to smaller endeavors, like attaching a picture to the wall, things can only become more complicated. Within the course of the project, there are always deviations between theoretical planning and execution in practice. Blockchain or DLT related projects have a significantly higher potential for deviation than recurring elements of routine day-to-day business.
Therefore, risk management should be an ongoing process during all phases of the project, from the initial idea to the completion. Systematic and effective risk management is an essential prerequisite for the achievement of the objectives of a project and thus, also for the success of the project. The goal of risk management is to identify possible risks, to analyze, evaluate, and implement adequate measures to counteract. In the planning phase, for example, it is possible to react much more flexibly and cost-effectively to the identified risks than in later stages of a project. During a project life cycle, individual risks can change, new, yet unknown risks may arise, or anticipated risks no longer exist. For this reason, it is important to highlight that risk management should be a continuous process.
The need for countermeasure awareness
The identification of possible risks represents the first step and thus constitutes the foundation for the further steps. In this phase of a project, it is advisable to consider and include more contingencies than might seem reasonable. There will be risks with a very low probability of occurrence, but remember, this might change throughout the project. For risks bearing significant impact and a high probability of occurrence, preventive measures must be initiated. Costs will be reduced, and time will be saved, which, therefore, increases the quality of the project result in the long term. For moderate risks, the course of action depends on the industry. As the technical aspects of a project increase and blockchain projects could hardly be more challenging in this respect, the more advisable it is to plan countermeasures even for medium risks. Minor risks can, as mentioned above, initially be neglected but need to be continuously monitored.
The decision on the appropriate measures depends on the following three factors:
- Risk potential
- Absolute impact of the measure
- Relative effect compared to the required effort
Finally, remember the role of stakeholders and their attitude towards the project. Given their influence and power, they might cause it to fail. During a project life cycle, it is possible that the attitudes of stakeholders change. It is also imaginable for new stakeholders to appear on the scene who have not been included in the initial planning. For these reasons, project management is called an iterative process.