Performing Risk Assessments for Product Managers – As a product manager, one of your most important responsibilities is assessing potential risks that could impact your product or project. Performing thorough and regular risk assessments allows you to identify issues early and take steps to mitigate them before they turn into major problems down the road.
A risk assessment involves identifying any possible risks that might affect your product, analyzing the likelihood of each risk occurring along with its potential impact, and then planning mitigation strategies to avoid or address those risks proactively. Establishing a diligent risk assessment process ensures your team can tackle complex product initiatives with greater confidence, by understanding and preparing for the risks involved.
In this guide to performing risk assessments for product managers, I’ll walk through a detailed approach to conducting robust risk assessments for your products. I’ll cover proven methods for identifying risks, techniques for analyzing their potential likelihood and impact, strategies for prioritizing risk severity, and examples of strong mitigation plans. With a solid understanding of risk assessment best practices, product managers can feel equipped to uncover and respond to risks before they threaten project timelines, resources, or quality.
Identifying Potential Risks
The first key step in a risk assessment is brainstorming to identify any potential risks that could impact your product or project. I recommend bringing together your product team for an open discussion where everyone contributes ideas. Encourage the team to think broadly about risks across all areas like your product itself, development process, team, technology stack, market landscape, timeline, budget, competitors, and more.
Some techniques to spur creative risk identification:
- Review documentation from past projects to find risks experienced by similar products. These historical risks can often apply to your product as well.
- Research reports about challenges faced by competitors or related products to uncover industry-level risks.
- Analyze your project plan and resources to pinpoint risks associated with your budget, staffing, timeline, dependencies, and technical complexity.
- Consider economic, regulatory, and technological changes on the horizon that could pose new risks.
- Use risk category checklists to stimulate brainstorming on risks related to security, market dynamics, product features, team members, third-party partners, data assets, and more.
Once your team has compiled an extensive initial list of potential risks through brainstorming, you can further expand your identification efforts through market research, customer interviews, focus groups with prospective users, and internal surveys. These methods may reveal external risks your team didn’t consider, from customer-related risks to competitive threats.
It’s also important to classify and group identified risks into categories like market risks, product risks, technology risks, process risks, etc. Organizing risks makes it easier to think through risk likelihood and impact for each category later. Avoid generalizations, and try to pinpoint as many discrete risks within each group as possible. Being thorough during risk identification sets you up for a detailed analysis of each risk next.
Analyzing Likelihood and Potential Impact
With your list of identified risks organized into groups, the next step is to analyze the likelihood of each risk occurring along with its potential impact on your product or project.
Have your team estimate likelihood and impact on a scale of 1 to 5, where 1 is very low and 5 is very high. Multiplying the likelihood and impact ratings together provides a quantitative severity score for each risk on a scale of 1 to 25. This exercise prioritizes the most pressing risks to address.
For example:
- Risk A has a likelihood of 4 and an impact of 3, so its severity score is 12.
- Risk B has a likelihood of 2 and an impact of 5, so its severity is 10.
- Risk A would be considered a higher priority than Risk B based on the severity scores.
When estimating likelihood and impact, consider:
- Likelihood – Probability of the risk event occurring, from very unlikely to almost certain. Assess based on risk history, data, and expert opinions.
- Impact – Amount of damage the risk would cause if it occurred, from negligible to severe. Estimate impact on budget, timelines, product quality, customer experience, etc.
- Market risks – Account for market size, demand, competitive offerings, and go-to-market strategies.
- Product risks – Consider the complexity, dependencies, and novelty of the technology/features.
- Technical risks – Factor in development team skills, system architecture, security needs, and integration with other tools.
- Process risks – Evaluate project management, communication channels, resource constraints, and vendor relationships.
Performing this diligent likelihood and impact analysis enables data-driven prioritization of the risks requiring the most attention and action.
Determining Risk Severity
Once your team has scored each risk by its severity, you can categorize the risks based on their scores to determine the appropriate response:
| Risk Severity | Severity Score Range | Description |
| Low Severity | 1-4 | Fairly minor risks with low likelihood and minimal impact. Monitoring is recommended, but active mitigation is not usually necessary. |
| Moderate Severity | 5-9 | Risks with notable likelihood and impact. They could negatively affect the project and warrant lightweight preventative actions. |
| High Severity | 10-19 | Major risks likely to occur with a sizable impact. Top-priority risks that require significant mitigation efforts to avoid or minimize damage. |
| Extreme Severity | 20-25 | Highest severity risks with severe potential impact and high probability of occurring. These risks can completely derail projects and require urgent risk mitigation as a top priority. |
This rubric allows you to focus risk mitigation efforts on the risks that truly matter most, rather than spreading efforts thinly across lesser risks unlikely to come to fruition. Evaluating risk severity guides smart resource allocation for mitigation activities.
Developing Mitigation Strategies
Now that you’ve identified and prioritized the risks your product faces based on severity, it’s time to develop targeted mitigation strategies. The goal is to devise actions that will either reduce the likelihood of high-severity risks occurring or minimize their impact if they do materialize.
For each major risk, brainstorm creative solutions to avoid or address it with your team. Consider these risk mitigation techniques:
- Avoidance – Alter your project plan or product to remove the risk entirely. For example, switching technologies to eliminate a technical deficiency risk.
- Control – Take direct action to prevent a risk from happening or contain it quickly if it occurs. Extra testing for high-reliability risks.
- Transfer – Assign ownership of the risk to a third party. Outsource a security audit to mitigate cyber threat risks.
- Acceptance – Monitor the risk but take no action. Remain flexible for moderate market shift risks.
Mitigation strategies should reduce likelihood, limit impact, or both. Some examples:
- Add extra time to the project plan as a schedule risk buffer. Reduces the impact of timeline overruns.
- Implement strong change management for a complex product upgrade. Lowers risk impact and the likelihood of customer churn.
- Launch a marketing campaign to bolster brand awareness pre-launch. Reduces competitive threat likelihood and revenue impact.
- Recruit more engineers to increase development bandwidth. Lowers feature risk likelihood by spacing out the delivery.
- Start integration testing early to catch defects. Reduces the likelihood of quality risks escaping to customers.
Ensure mitigation owners are assigned responsibility for implementing each strategy in the project plan. Failing to convert plans to action leaves risks unaddressed.
Executing and Monitoring Risks
With mitigation strategies defined, it’s time to execute the plan and continuously monitor risks throughout your project lifecycle.
Mitigation owners should be working risk response activities into the project plan and their team’s workflows. Monitor progress to ensure mitigation strategies are implemented promptly.
Schedule regular risk review meetings to reassess the likelihood and impact as the project progresses. Risks can evolve, so it’s important to keep evaluating the risk landscape. Reviews also uncover new risks that emerge during development.
A risk review cadence will depend on the length of your project, but at minimum assess risks on a monthly or bi-monthly basis. Look for risk likelihood and impacts trending up or down based on performance data and project changes. Updating severity scores informs which risks need renewed mitigation efforts.
If certain risks are resolved fully, they can be removed from review. But be cautious about determining whether risks are fully addressed. Hidden residual risk often remains after mitigation.
By continually tracking risks and refining mitigation responses, your team can stay agile, pivoting as needed to navigate new threats. This empowers intelligent risk management as your project advances.
Conclusion
In this guide to performing risk assessments for product managers, we’ve explored how performing regular risk assessments is crucial for PM’s leading complex projects and initiatives. A proactive approach identifies potential risks early when they are easier to mitigate. Analyzing likelihood, impact, and severity allows smart prioritization of the risks requiring the most urgent response. Devising targeted mitigation strategies tailored to each risk prevents problems before they arise or limits damage if they do occur. Consistent monitoring and reviews enable agile course correction as risks evolve over the project lifecycle.