What is project risk management? Every business endeavor includes some amount of risk, whether financial, physical, compliance, security, or a combination of factors. Some risks, such as theft or natural disasters, are unexpected and therefore difficult to plan for. Consider, for instance, the impact of the COVID-19 pandemic and the upheaval and even demise of many organizations that followed.
But companies must do the best they can to mitigate risks of all kinds. Project risk management software can help by identifying possible risks, improving communication between stakeholders, enhancing the budgeting process, and more. In the sections below, we explore which companies and projects can benefit most from risk management software, the basic features of risk management software, and how to choose the right one for your business.
What Is Risk Management?
It doesn’t take much to see where risks come from in today’s business environment. From volatile markets to security breaches to extreme weather events, stories of things that can go wrong are part of every newscast. Risk management is the process of planning for and mitigating or avoiding known risks and making contingency plans for unknown challenges.
Addressing a challenge when it has already occurred is too late, so one key to risk management is being proactive. Another is understanding the next level of complexity: the relationships between risks. A third is knowing what steps to take to ensure successful project outcomes.
Which Companies Can Benefit From Risk Management Software?
Any company that has something to lose can benefit from risk management, and any company that can benefit from risk management can make the process easier with risk management software. Risk management software companies ensure that these applications not only track and manage various risks but also recommend additional risks to consider and ways to address them.
Organizations are more likely to benefit from risk management when they systematize an entire risk management approach. That means performing an audit of the business and identifying what events or situations would be catastrophic for the company and baking ways to avoid them into all company processes. For instance, healthcare providers would be devastated by a breach that resulted in loss of patient privacy. So, risk management for them should include stringent cybersecurity protocols at all stages of healthcare delivery.
What Are the Basic Features of Risk Management Software?
The following features are typically included in risk management software.
- Project management. Risk management software should be based on risks associated with specific projects.
- Problem identification. Risk management applications should enable users to input extensive information about their projects and use that information to alert them to problems or delays.
- Communication tools. Project success depends on the ability of all parties involved to communicate and collaborate. Risk management software should provide tools to make it easy for them to do so, using other data within the application as a starting point for important conversations.
- Budget planning. One of the biggest risks in any project is going over budgeted cost or time, which is why risk management applications should include a component that offers alternatives when overages occur, such as using different methods or materials.
- Integration with other software. Risk management applications should pair well with the current technology ecosystem, including compliance management software.
- Report generation. Risk management applications should include the ability to generate reports so users can share information among stakeholders and base decisions on accurate project updates.
- Intuitive dashboard. All of the features above should be available through an easy-to-use interface that helps users quickly find information and customize the program to the company’s needs.
How to Choose the Right Risk Management Software for Your Business
The right risk management tools for your business will be those that meet your company’s specific requirements. Consider the following steps.
- Start asking questions. Who will be using the software, and what are their needs? What problems do you want the application to solve? How widely will the program be deployed, and which programs can accommodate those deployments? Does the application allow for expansion if needed? What outcomes will you consider a success?
- Consider risk management software cost. Naturally, your budget will help you determine which application is best for your company. Remember to factor in the money you will save through enhanced risk management.
- Build a business case. If you must get executive approval to purchase the software, think about and present the overall company need rather than just that for your department or function.
- Consider disadvantages. Ask if your company has the capacity to adjust to the new software when, for example, different departments follow different protocols for project management in general.
- Perform research. Start by asking your IT team or consultant for their recommendations, then widen the circle to other companies’ suggestions and general online searches. Be sure to ask for demonstrations of any risk management software applications that are a strong possibility.
Benefits of Risk Management Software
So, what outcomes can you expect from deploying risk management software? Here are a few.
- Gain a realistic understanding of the risks your business faces, especially as you perform certain functions or provide specific services.
- Provide realistic expectations to customers and other stakeholders.
- Enhance your ability to make smart decisions that take a wide variety of factors into consideration.
- Lower costs associated with the failure to manage risks, such as fines related to compliance issues.
- Gain efficiency and strengthen customer loyalty by building processes around risk management.
- Address some of the most pressing business challenges, such as weak cybersecurity.
Many of these benefits are great for your company overall because they provide foundational components that support long-term business success.
