Project Risk Management: Are You Protecting Your Investment?

“Risk-taking is an inevitable ingredient in investing, and in life, but never take a risk you do not have to take.” — Peter L. Bernstein

Large-scale projects in mining, oil and gas, energy, infrastructure, and defence are inherently complex, requiring significant capital investment, strict regulatory compliance, and the ability to manage unpredictable challenges.

According to the PMI report, organisations waste an average of $122 million per $1 billion invested due to poor project performance—a significant portion of which is attributable to inadequate risk management practices. (PMI Pulse of the Profession®, 2016)

While risk management is fundamental to project success, the question remains—how effective is your current approach?

Let’s take a closer look at your project’s risk strategy and identify areas for improvement.

But first…

Don’t Overlook the Least Obvious

The obvious project risks may seem like the biggest risks, but often, the real danger lies in the details.

Small oversights, unvalidated assumptions, and gaps in technical expertise can quietly undermine a project long before major issues become visible.

Before you even step back to assess the bigger picture, it’s crucial to scrutinise the foundational processes that drive your project forward.

When small but critical details are overlooked, they can snowball into costly and irreversible failures.

By examining past failed projects through a retrospective lens, common errors often identified include:

• Unrealistic Market Assumptions: Assuming that booming commodity prices will last indefinitely without considering where the project sits on the competitive cost curve can lead to financial miscalculations.
• Siloed Thinking & Lack of Integration: Technical, project, and business teams working in isolation without considering interdependencies can create misalignment and inefficiencies.
• Weak Prefeasibility Studies: Skipping alternative analyses or selecting the wrong business case undermines project viability from the outset.
• Flawed Feasibility Studies: Incomplete or inaccurate feasibility studies often lead to over-reliance on final engineering fixes or contingency budgets to correct fundamental errors.
• Poor Project Controls: If staff fear repercussions for delivering bad news—or worse, lack the experience to apply proper project management processes—risks escalate unchecked.
• Obscure Progress Reporting: Over-summarised reports that obscure real project status make it difficult for stakeholders to spot emerging risks before they become critical issues.
• Lack of Proactive Risk Management: Every project will face challenges—what matters is anticipating and managing them before they become unavoidable. Complacency in identifying risks early is a major contributor to failure.

💡Best Practice Tip: Ensure your project processes are well-defined and that your team has the experience to recognise what is truly critical in a project. Experienced teams can identify subtle yet significant issues early, ensuring that key details don’t get overlooked and risks are managed proactively.

The Role of Clear Objectives in Risk Mitigation

Even the most comprehensively planned projects encounter unforeseen challenges. The difference between success and failure often hinges on how well risks are identified, assessed, and mitigated in advance.

A fundamental question to ask is whether your team fully understands the project’s objectives. Are they clearly defined and consistently communicated?

Misalignment can lead to project mismanagement, missed deadlines, and failure to meet stakeholder expectations.

Clear objectives serve as a strategic roadmap, ensuring that every project phase aligns with the intended outcome. When objectives are vague or inconsistently conveyed, teams are forced to make assumptions, increasing the likelihood of misunderstandings that could jeopardise your project’s success.

Establishing and maintaining clarity is critical in large-scale projects, where scope, timelines, and budgets often shift. Teams must not only understand project objectives, but also stay informed about any changes, with effective communication enhancing your overall project certainty.

💡Best Practice Tip: Invest in developing a comprehesive Project / Study Charters and conduct regular team briefings to ensure alignment at every stage of the project lifecycle.

Stay Ahead of Project Hazards with a Risk Register

A well-maintained risk register is essential for identifying, tracking, and managing project and safety risks.

From budget overruns and resource shortages to environmental impacts and health hazards, a risk register provides project managers and stakeholders with a structured, real-time overview of potential threats to your project, ensuring no risk is overlooked.

By centralising risk documentation and updating it regularly, teams can take a proactive approach to risk management.

A structured risk register helps prioritise and mitigate risks and assigns clear ownership, ensuring accountability and timely intervention before issues escalate.

💡Best Practice Tip: Invest in digital risk management tools to streamline tracking and updates, keeping your risk register a dynamic and actionable resource throughout the project lifecycle.

How to Identify Critical Risks?

Critical risks have the potential to derail a project, requiring immediate and targeted mitigation. Whether they stem from safety hazards, environmental challenges, or operational failures, these risks demand well-defined strategies to minimise their likelihood and consequence.

Effective mitigation begins with a structured approach to risk identification. Once a major hazard is recognised, assessing its potential consequences using risk rating criteria helps prioritise control efforts.

Ongoing Monitoring: Keeping Risk Management Active

Risk management is a dynamic process, not a one-time task. Continuous monitoring ensures that potential hazards are actively managed and that mitigation strategies remain effective throughout the project lifecycle.

A structured reporting plan is essential.

Assigning risk ownership to a senior line manager ensures accountability, with regular reporting to track the effectiveness of risk controls. Frequent risk reviews between risk owners and senior management provide a clear, up-to-date understanding of the evolving risk landscape. These meetings are a platform to review the risk register, assess existing mitigation measures, and address new or emerging risks.

By fostering a collaborative and transparent approach, organisations can ensure that risk management remains a central focus.

💡Best Practice Tip: Establish regular risk review meetings with a clear agenda, ensuring all key stakeholders are involved. Adjust the frequency based on project size, complexity, and risk profile.

Managing Emerging Risks

Emerging risks—those that were not anticipated at the outset of a project—can create unforeseen challenges. These risks often arise from evolving technological, environmental, or geopolitical factors, requiring teams to remain agile and responsive.

Because emerging risks are unpredictable, a flexible risk management approach is essential.

This includes maintaining strong communication channels with all stakeholders to ensure timely updates and adjustments.

By staying informed and proactive, teams can refine their strategies before an emerging risk escalates into a critical issue.

💡Best Practice Tip: Implement continuous risk assessment processes and foster a culture of open communication, empowering team members to flag potential emerging risks early.

Is Your Project Risk Management Strategy Effective?

Boards, Investment Committees and CEOs don’t expect projects to be without risk, but they want to be properly informed about them.

When implemented correctly, project risk management boosts the probability of success, alleviates anxiety, and offers a higher degree of predictability.

💡The best overall tip to remember is that precision in planning leads to excellence in execution.