Portfolio risk management

Universal Practical Simple Practices Easy implement Cost efficient Off-the-shelve software

PORTFOLIO RISK MANAGEMENT:

Companies who have many projects do establish portfolio management practices where risk management is an important part. Standartization of risk management become important as well as regular review of the most important risks. Effective escalation process that enables risks to be reported to the relevant portfolio governance body is highly recommended.

It is vital that company CEO invest at least small amount of his\her time for portfolio risk management by showing example and importance of such portfolio risk management in the company.

Another competence area that becomes important is - DEPENDENCY MANAGEMENT as usually portfolio consists of many projects and assignments that can depend on each other. Dependency management does not have to mean a sophisticated, bureaucractic, complex approach. It can be adopted as simple matrix with major change initiatives where we shown : A) Which initiative was the 'giving' and the 'receiving', B) Brief description of the depencendy, C) Impact of the depencendy that is 'receiving' should be rated at least by 1) Critical, 2) Major, 3) Minor. More info on KEY CHALLENGES for managing DEPENDENCIES in Portfolio see below in the page. Other vital practice to empower/delegate critical roles to act and take leaderhips in risk management on every project in portfolio. You can apply universal Risk management steps/ practices and will increase your portfolio probability to succeed.

SUGGESTED SUCCESS FACTORS for good PORTFOLIO RISK MANAGEMENT:

No.	Factor	Description
1	Strategy alignment	Roles and processes for portgolio risk management should be incorporated into portfolio mgnmt framework. It should be consistent with organization risk management policy.
2	Involve experts	Close working relationships between portfolio group/office and organization risk management function if such exists.
3	Risk based prioritization	For portfolio project prioritization risk should be added as prioritization factor. Proposed matrix is helpful for presentation - hihglightinh risks (or achievability) and benefit(or attractiveness )
4	Incorporate risk into change lifecycle	Risks must be owned at an appropriate level and incorporated into the portfolio reporting, reviews on stage/gates.
5	Portfolio risks	It is rarely a signle risk that will cause major problems. So focus on aggregated project risks and generic risks.
6	Reporting	Ensure that the status of each of the top portfolio risks are in portfolio dashboard and risk actions are regularly reviewd and updated.

SUGGESTED Portfolio risks SOURCES:

No.	Source	Description
1	Resource Constraints	Limited availability of skilled resources, such as project managers, team members, or subject matter experts, can pose a risk to project portfolio execution. Insufficient resources may lead to delays, increased workload, or compromised project quality.
2	Dependencies and Interdependencies	Projects within a portfolio often have dependencies on each other or on external factors. Delays or issues in one project can cascade and impact the timeline, deliverables, or dependencies of other projects in the portfolio.
3	Scope Creep	Uncontrolled changes or additions to project scopes can lead to increased costs, extended timelines, and strained resources. Scope creep can occur within individual projects or across the portfolio if there is inadequate governance and change management processes in place.
4	Financial Constraints	Limited budget allocation or unexpected cost overruns can pose risks to the portfolio. Insufficient funding may result in compromised project deliverables, resource constraints, or the need to terminate projects prematurely.
5	Stakeholder Expectations	Misaligned or unclear stakeholder expectations can create risks in project portfolios. Inadequate communication, ineffective stakeholder engagement, or differing priorities among stakeholders can lead to project delays, scope changes, or dissatisfaction with project outcomes.
6	Regulatory and Compliance	Projects within a portfolio may be subject to various regulatory requirements or compliance obligations. Failure to comply with applicable regulations can result in legal consequences, financial penalties, or reputational damage.
7	Technology and Infrastructure	Risks related to the use of technology and infrastructure can impact multiple projects in a portfolio. These risks can include system failures, compatibility issues, security vulnerabilities, or inadequate infrastructure capacity.
8	Market and Competitive Factors	External market conditions, industry trends, or competitive pressures can pose risks to the portfolio. Market shifts, changing customer preferences, or emerging technologies can impact project viability, market acceptance, or financial returns.
9	Governance and Decision-Making	Poor portfolio governance and decision-making processes can create risks. Lack of clear criteria for project selection, inadequate portfolio oversight, or ineffective prioritization can result in the inclusion of projects that do not align with strategic objectives or insufficient allocation of resources.
10	Organizational Change	Transformation initiatives, mergers, or organizational restructuring can introduce risks to project portfolios. Resistance to change, cultural barriers, or shifts in organizational priorities can impact project execution, resource availability, or stakeholder support.

Key challenges for managing dependencies in Portfolio:

Depencency information is not readily available

Uncertainty about what type of dependency exist

How to document and manage dependencies

How to present complex information in an easy understandsable format

What are the most important dependencies

EXAMPLE from T RISK REGISTER🔺:

Link to Portfolio example on LINKEDIN - PRESS HERE

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