Risks are uncertain events or conditions, that if happens, may hamper the project goal and objectives, or delay the project activities and deliverables; depending upon type and the period for which the risk remains active.
In a project proposal, donors want to know about the possible risks and its mitigation plan, as they would like to be sure that you are able to forecast the possible risks and have built in steps/mechanisms so that the impacts of these risks on the project goals and objectives are minimal or not compromised. Risks and mitigation are also enquired, as donors are not aware of the local conditions and thus, through this, they would like to gauge possible local conditions impacting the project and your control over the same so that the project objectives and more importantly the outputs are not compromised with.
Categories of Risks
Risks for development projects and possible mitigation efforts that could be explored can be broadly categorised as:
- Natural– Natural disasters/ unforeseen changes in weather or other conditions such as a current pandemic, COVID- 19, which the project location is likely to be affected by. Mitigation could be either to find an alternative way of conducting the activity or in the worst condition, postpone the activity till the situation gets normalised.
- Policy– Governments change, and usually the new government prefer to come up with a new set of policies or programmes, which may impact the project goals and objectives, directly or indirectly. A possible mitigation strategy could be too, by design engage/involve relevant Government departments/ offices at all stages of the project and wherever possible, have a written letter/agreement of partnership with them.
- Cost Risks– Particularly if the project uses an input whose cost may vary with demand, impacting the cost of the project. Possible mitigation could be adjusting the use of inputs so that impact of any demand change on the project cost is minimal.
- Technology– At times the use of technology (water technologies, biomass technologies, energy technologies to even health technologies and even the ICTs) can be very frustrating and confusing, particularly if your project is majorly technology-driven. Availability of technological inputs/ repair can take longer than expected, which would lead to delay in the project schedule. A possible mitigation plan could be having someone in your team who understands the particular technology better and is able to handle it appropriately.
- Other Stakeholders, say community groups or other NGOs or say a technical or academic partner, on which your project is dependent– If the project is dependent on various stakeholders for completing activities, delay or non-cooperation by any stakeholder can result in a delay in the project output. Possible mitigation could be having an alternative strategy built-in if a stakeholder does not respond to how to conduct the activity so that the project delay could be avoided.
- Resources Risks– The project may need several resources including staff and further, resources are required by the team to conduct project activities and meet goals and objectives. Delay/ non-availability can be the risk of a resource for the project. Possible mitigation could be on making sure able to provide what is required by the team as per the team’s job and satisfaction.
- Miscellaneous– There are many other things that could lead to delays in the project. Such factors could be legal, political, social, cultural, etc. Mitigation could be taking extra precautionary measures and continuously reviewing against the possible risk that may further occur and how to handle the same.
Thus, any project that is done outside the controlled environment is bound to have associated risks. Understanding the possible risks and how strongly you are in the position to handle it is something the donor wants to know from this section of your project proposal.
The clearer and comprehensive is your risks forecast, the better are you positioned to handle such risks; thereby increasing the chances of your project proposal getting accepted and approved.
Wishing you the best with proposal development and sanctioning process.