How to create a risk management plan for your career

You’ve entered the workforce and you’ve got a career plan with short-term objectives and long-term goals. You’ve got all the right qualifications, you’re where you want to be, motivated and positive and optimistic about the future. All you need now is a solid risk management plan to keep your career path on track.

A well-crafted risk management plan can protect your career from unexpected hurdles and keep things moving forward in case obstacles get in the way. It provides a Plan B (or Plan C) if ever you need alternative options. 

Here’s how you can create actionable career risk management strategies that will help you enjoy long-term career success.

• What is a risk management plan for your career?
• The importance of risk management planning for your career
• Key steps in creating a risk management plan
• Risk identification techniques
• Risk assessment and prioritisation
• Developing career risk response strategies
• Implementing and monitoring the risk management plan
• Best practices for effective risk management
• FAQ

What is a risk management plan for your career?

A risk management plan helps you anticipate risks and come up with workaround strategies to avoid obstacles to reaching your goals. Its components include the following:

• Risk identification. Identify the risks associated with a new or existing timeline or project. Thinking about challenges ahead of time can help you develop strategies before you need them.

• Risk assessment. This involves considering the implications of starting a new project or career trajectory, particularly how it will impact your other life plans.

• Risk reduction strategies. Think of a Plan B or C to ensure you can deal with any challenges or setbacks. For instance, what can you do or plan now to minimise or avoid risk in the future?

• Process monitoring and review. A risk management plan is a living document that you can always amend. You should review it regularly to keep it updated with your progress and see if you need to alter anything along the way.

Risk management framework components

Take the risk management framework above and apply it to your career planning. There are several things to consider, detailed below.

• Risk identification: identify potential risks that could impact your specific career goals, like unexpectedly losing your job or missing a promotion

• Risk measurement: measuring risk involves gathering information on risk exposure and judging whether your plans will work.

• Risk reporting and monitoring: ensure you have the correct risk exposure information when considering your career plan.

• Risk governance: guidelines for you to follow if a threat occurs, and any exceptions.

• Risk appetite: Your risk appetite defines how much risk you're prepared to accept to achieve your goals.

• Risk tolerance: is how much risk you’re willing to tolerate to reach your goals? 

Risk universe categories

A risk universe is a list of all potential risks someone may face. Risk categories can include:

• Operational. These are risks from day-to-day activities (such as human error) or bad business practices (such as lack of productivity).

• Strategic. Strategic risks relate to your career objectives and strategy, such as how you position yourself or how to progress in the required timeframe.

• Financial. These risks come with monetary issues, such as dealing with a reduced income while conducting job searches or making financial plans for the future.

• Legal. Legal risks arise from non-compliance with laws, regulations, and industry standards in your chosen career.

• Reputational. These risks relate to how people you work with may perceive you.

The importance of risk management planning for your career

There are many benefits of implementing a personal career risk management plan, including points such as the following.

Improved decision-making

Setting a risk management plan in action gives you clarity and the ability to think clearly and logically. This will help you make better decisions that can benefit you over time.

Realistic and achievable career goals

Seeing everything mapped out means you can be realistic about your future, what you can achieve in your career, and whether you can do it in the timeframe you'd like. It allows you to be honest about your ambitions and manage your own expectations.

Improved adaptability and resilience

Thinking laterally about the potential pitfalls of a career move or the trajectory of a project allows you to cope with the stresses that may occur. You'll learn how to be pragmatic and resilient and cope with changes.

Financial stability and security

Risk management plans allow you to take a considered approach to your finances. When you take the first steps of a journey like this, setting out potential monetary challenges and finding workable ways to manage them means you can see the bigger picture. You can determine whether specific pathways are financially viable or not.

Enhanced professional network

When making risk management plans, find success stories and examples from other professionals who have used them effectively. Use this to network and connect with like-minded people with the same career ambitions.

Continuous learning and growth

The more you use these techniques, the better you'll understand a project's challenges or find ways of further developing your career. They're a great way to learn, grow, and adapt, whether you're on the first steps to looking for a new job or finding ways to make an established business thrive.

Increased confidence and job security

In the long term, effective risk management planning gives you more confidence to tackle projects or career challenges successfully. It can give you the clarity to push forward when times are challenging and make the most of the opportunities that come your way.

The next stage is looking at creating a risk management plan that suits your career.

Key steps in creating a risk management plan

These are the essential steps in developing a comprehensive risk management plan for your career path.

1. Identify career goals and objectives

Understand your ultimate target, and the steps you need to take along the way. Does it involve upskilling and looking at further training to excel in a current role, or do you want to enter a different industry? Perhaps you want to set up a business. Consider what you want to achieve and set your ultimate career goal.

2. Identify potential industry risks

Look at industry-specific challenges that you may need to consider when creating a risk management plan. For instance, in Western Australia, the government has put in place a risk-management plan to ensure that every one of its departments can manage risks when buying goods and services. Every industry has some degree of challenges. Setting these out clearly can assist you when you decide to move forward.

3. Assess and prioritise risks

Think of the best- and worst-case scenarios. Consider the probability of each outcome and its potential impact. There will be pros and cons to every option, and it's essential to think about the consequences and make contingency plans for those situations.

4. Develop risk response strategies

For each point of your plan that requires it, brainstorm ideas to help you mitigate potentially bad outcomes. Come up with alternate pathways that overcome these scenarios.

5. Implement risk mitigation measures

Consider each risk and its root cause to determine the impact it might have. If the risk is high impact and the cost of mitigation outweighs any positives, you may choose to avoid the risk.

6. Monitor and review the plan

Regularly take time to revisit your plan and the strategies you've outlined. It's essential to make changes if you need to update the plan for risks or changes to the strategy you've undertaken since implementing it.

Risk identification techniques

The first, and most essential part, or creating a risk management plan is establishing what the risks are. Below are outlines of different methods for identifying potential risks.

Brainstorming sessions

Host a meeting with other professionals to share opinions on specific career goals or work out how to create a risk management plan.

SWOT analysis

Perform a SWOT analysis to evaluate a project or career goal based on its strengths, weaknesses, opportunities, and threats.

Historical data review

This is a technique using past reports on identified career risks. You can determine how relevant this data is to you and your situation and apply any relevant points.

Expert interviews

 Arrangeone-on-one discussions with professionals and experts to identify risks and flaws in your plan, and look at individual risk management examples.

Delphi technique

Send out questionnaires to experts and log responses without linking the opinions to those who suggested them. Then use the same group for further qualitative risk analysis or amendments. It ensures that those participating can share opinions anonymously without influencing each other.

Risk workshops

Hold collaborative sessions where stakeholders identify, analyse, and prioritise individual risk management examples. These workshops aim to develop strategies to reduce risks and create a shared understanding.

Stakeholder interviews

Conduct one-to-one conversations with key professionals in your industry to get a sense of your career plan's likely outcomes and whether your goals are feasible.

Project assumption assessment

Identify, document, and verify project assumptions to reduce the risks. For instance, you could look at your risk management plan and assume you'll meet all your targets by the deadline. However, you can't account for the unexpected, such as unforeseen budget restrictions, needing more resources, or even allowing for time off.

Risk assessment and prioritisation

The process of assessing and prioritising identified risks considers the following.

Qualitative vs quantitative risk analysis

Qualitative risk analysis is a subjective approach that relies on expert opinion, brainstorming, and looking at historical data to identify and prioritise risks. For example, if you’re setting up a new business from scratch, you'd evaluate your location, look at the success of other companies in the same niche, and see how you can improve on them.

Quantitative risk analysis, on the other hand, is an objective, data-driven approach. It uses statistical analysis and mathematical equations to quantify risks. You could use it to weigh up the financial risks associated with a particular work project you want to complete. You'd estimate costings and look at the risks associated with these.

Risk probability and impact assessment

This is how likely the risk is to occur (its probability) and the effect if it happens (its impact). So, you might look at the probability of what would happen if you didn't get a new job with the company you've always wanted to work for. The impact might be disappointing and inconvenient at first. But it might mean that something else that's better suited to you is around the corner.

Risk scoring and ranking methods

You can use risk scoring and ranking methods to identify, evaluate, and mitigate risks based on a matrix. For instance, in aged care in Australia, governing bodies use a risk matrix to assess and determine risk ratings based on different likelihood and consequence criteria.

Creating a risk heat map

A risk heat map is a data visualisation tool illustrating specific risks you might face. It helps you identify and prioritise the risks relating to the goals in your career plan. It's a graph that has two primary axes. One considers the likelihood of a risk occurring, while the other shows its impact if it does.

Risk prioritisation technique

This technique determines which risks are most critical and which you should address first. It's a useful technique that focuses on the likelihood of prospective risks and helps with prioritising.

Developing career risk response strategies

Here are the main types of risk response strategies you can use when risk management planning.

• Avoidance. This is a strategy for changing a project or plan to sidestep any conditions that trigger a risk event. It's a proactive approach to take, despite its name.

• Mitigation. This describes how to take action to reduce risks. One example is getting a third party, such as another professional in the same industry, to review your plans and give an opinion. It's useful before you make a big decision, such as trying for a promotion or pivoting to a new field.

• Transference. Here's when you move the risk to another party. You may be thinking about setting up a small business. You understand there will be a significant financial risk, so you consider engaging investors or partnering with an established company.

• Acceptance. This means acknowledging a risk exists, but not acting unless it happens. Acceptance can have positive or negative results – this approach may be worth if if the risk is relatively small.

• Risk retention. This risk management strategy involves a person assuming responsibility for a certain level of risk or losses. It's similar to risk transference. You may set yourself up in business but not take out insurance to cover damage to a company building. Instead, you could set aside funds to make sure you can pay for repairs out of pocket.

Implementing and monitoring the risk management plan

Think about the best ways to effectively implement and monitor a personal career risk management plan, such as the following.

• Take responsibility for risk management tasks.

• Establish risk thresholds and triggers.

• Develop a communication plan for risk-related information.

• Create a system for tracking and reporting on risks.

• Conduct regular risk reviews and updates.

These ideas can help you create a practical risk management plan that's easy to follow and effectively keeps you on track to your goals.

Best practices for effective risk management

Consider the following best practices for creating and maintaining an effective risk management plan for your career.

• Foster a risk-aware attitude and realise there are some risks worth taking.

• Integrate risk management into all aspects of career planning.

• Review and update the risk management plan regularly.

• Learn from past experiences and near misses.

• Conduct regular risk assessments.

• Quantify and prioritise risks.

• Implement robust risk treatment controls.

• Continual review and improve your risk management practices, to ensure continued progress towards your goals, with wins along the way.

A well-developed personal career risk management plan is essential if you want to take proactive steps to stay on track to your long-term professional goals. Being risk-intelligent rather than risk-averse is critical, as is understanding that risks can present opportunities for growth and resilience in the future – the trick is being prepared for them.

FAQ

How does a personal risk management plan differ from a business risk management plan?

A personal risk management plan is specific to the individual, their career aspirations, and lifestyle. A business risk management plan must focus on the entire organisation, including its objectives and all its employees.

What are the key components of a career-focused risk management plan?

First, set clear, achievable goals that take you to your desired target, which is the job or professional outcome you're aspiring to reach. Look at all the associated risks, from financial to ultimate job security. 

What are the benefits of a risk management plan?

A clear risk management plan makes your career plan – and you – more resilient. It gives you ways to overcome any obstacles between you and you professional aspirations.  It can make you more decisive and ultimately mean you're more able to make sound choices regarding your career.

What are effective techniques for identifying career-related risks?

Thoroughly weigh the pros and cons of every stage and assess each choice you make. If the potential negatives outnumber the positives, you can avoid a situation that may lead to  setbacks.

How can you implement and monitor a career risk management plan?

Start by looking at other examples of people who inspire you to see how they've used risk management in their careers. Take a measured approach to writing your own and ensure you stick to manageable targets.

What are the best practices for maintaining an effective personal risk management plan?

Review and maintain the document regularly to ensure you're staying on track. Update it whenever you have passed a milestone, hit an unexpected hurdle, or overcome an obstacle. 

What is a career risk management plan?

It's a useful document that can help you determine the best way to reach your career goals, including evaluating the risks, advantages and disadvantages of specific steps on your career pathway.

How do I identify career risks?

For each point of your career risk management plan that requires it, brainstorm ideas to help you reduce risks. Think of different pathways that will avoid these scenarios.

Carefully think about each risk to determine any impact it might have. If the risks are too high impact and mitigation outweighs the positives, it may be best to avoid a particular career risk.

Consider all the best- and worst-case scenarios; there will always be pros and cons to every career option. Take into account any contingency plans you might have to make in these situations.

Can risk management really help my career?

Putting together a career risk management plan is a fantastic way of reaching your desired career goals and ensuring continued professional success. 

Once you have secured the job you’ve been aiming for, undertaking regular risk management plans can make you a more confident, responsive team player who can take a practical approach to dealing with day-to-day tasks and problem solving.