Risk Management in Projects

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Date Submitted: 05/23/2014 12:56 AM

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What Is Risk Management?

Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive. Proper risk management will reduce not only the likelihood of an event occurring, but also the magnitude of its impact.

Risks can be mainly divided between two types, negative impact risk and positive impact risk. Not all the time would project managers be facing negative impact risks as there are positive impact risks too. Positive risk can include; some events (like finding an easier way to do an activity) or conditions (like lower prices for certain materials) can help your project! When this happens, we call it an opportunity but it’s still handled just like a risk.

Once the risk has been identified, project managers need to come up with a mitigation plan or any other solution to counter attack the risk.

Why do Risk Management?

The purpose of risk management is to:

• Identify possible risks.

• Reduce or allocate risks.

• Provide a rational basis for better decision making in regards to all risks.

• Plan.

Assessing and managing risks is the best weapon you have against project catastrophes. By evaluating your plan for potential problems and developing strategies to address them, you'll improve your chances of a successful, if not perfect, project.

Additionally, continuous risk management will:

• Ensure that high priority risks are aggressively managed and that all risks are cost-effectively managed throughout the project.

• Provide management at all levels with the information required to make informed decisions on issues critical to project success.

If you don't actively attack risks, they will actively attack you!!

Various sources of risk include:

• Project Management sources

 Top management not...