Risk Management

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The Importance of Risk Assessment and Management

In definition a risk refers to an uncertain occurrence or an activity that if takes place could have either harmful or beneficial effects or both in realizing goals (Schatz, 2010). Therefore a risk has the potential to create threats as well as opportunities. Speaking in general terms however a risk is often seen as a loss or a negative impact that is quantifiable. In business, risks can determine the profitability of the company. As such the success of a project also largely depends on the extent to which the risks are eradicated or minimized. A risk can be influenced by both internal and external factors. Therefore in project management vital importance is given to risk management. According to Tatum (2011) Risk Management is the complete process of risk assessment and then taking the requisite steps to communicate and prevent the harmful outcomes of such a risk. In this scenario, risk assessment involves the identification, evaluation, quantification and prioritization of potential risks. A project team involved in an Information System’s project may encounter various types of risks. Project risk, security risk, system risk, organizational risk, business risk, people risk would be to name of these (Redman 2010; Vijay 2007). To effectively combat these, the project team and the project manger must develop risk management strategies. So let us now look into why it is important to manage risks well. To begin with it is found that the one of the biggest reasons for IT project failure is the inadequate risk management (Brown, 2010). This factor also proves the ineffectiveness of project planning as risk management is associated with the planning stage as well. Proper identification and handling of risks increases probability of project success. Therefore contingency planning should be carried out to ensure all angles are covered in case of a risk occurrence (morebusiness, 2007). Such measures being taken would...
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