Project Management for a Risk-Averse Culture

Successful business involves balancing risks and rewards. Although greater rewards often require greater risks, there are ways for companies to meet with success while taking a bare minimum of risk. Risk-averse businesses favor the method of playing it safe, preferring slow and steady gains to the possibility of company-wide failure.


The first key to managing the risks involved in any project is to make an assessment. Developing a framework for risk assessment is worthwhile, and it doesn't have to be a complex or high-budget endeavor. Risk assessment involves taking stock of any project and determining what problems could arise beyond normal expenses. Many outside factors must be considered, such as interest rates, the economy, consumer demand and labor relations. A good risk assessment takes account of anything that could go wrong with a project and determine what it would cost would. Risk assessment allows a business to decide if proceeding with a project is worthwhile.


Part of the risk of any project involves the way in which it is financed. Most companies need to borrow money for projects at some point, and they do so with the hope that they can make enough money to pay back the loans and still come out with a profit. Risk-averse managers want to keep finance to a minimum. Although some sort of borrowing may be inevitable, risks can be reduced by borrowing from traditional institutions with lower interest rates, such as banks, as opposed to multifaceted financial institutions. Risk-averse businesses also might want to stay private so as to avoid introducing the factor of public trading and mass investor psychology.


For a risk-averse business, any project is best kept under the tightest control possible by the company's management. Contracting out, investing overseas and financial speculation can put a company's resources into inherently risky territory where managers cannot keep track of them. Even the best and most honest third party might mismanage a project, spend funds irresponsibly or fail to report complications. The best way to insure against these situations is for the company to manage projects directly to the greatest extent possible. This allows projects to be carried out in accordance with the company's goals and appetite for risk.


One very good way to manage the risks involved in any project is to take out insurance. Businesses can take steps to mitigate risks to the best of their ability based on their initial assessment, putting policies into play that guarantee that the worst case scenario is survivable. In some cases, businesses can take out actual insurance policies. The tools a team is using, the building they are working on, company assets and company investments all can be insured by various policies. Not everything must be insured, but the riskier aspects of any project could benefit by at least being considered for insurance.