Topics: Project management, Risk management, Management Pages: 7 (1863 words) Published: April 22, 2014
Risk is any factor that may potentially interfere with successful completion of the project. A risk is not a problem-a problem has already occurred; a risk is the recognition that a problem might occur. By recognizing potential problems, the project manager can attempt to avoid a problem through proper actions. Project Management is the skills, tools and management processes required to undertake a project successfully. Stakeholders are persons or organizations that are actively involved in the project, or whose interests may be positively or negatively affected by the project.

Organizations take risks to benefit from potential opportunities however; these opportunities involve an element of risk. Projects entail a level of uncertainty and therefore carry business risk. Every project has risks. Organizations that succeed are the ones that plan for those risks – anticipating, mitigating, and providing response and contingency plans for negative events that may or may not occur. Risk Analysis solutions provide the tools for doing just this, enabling companies to identify, assess and model risks – and, in the process, taking much of the uncertainty out of project and portfolio management. A project risk can be defined as an uncertain event or condition that, if it occurs, will have a positive or a negative effect on a project’s objectives. Identifying risk in the planning stage enables better project selection decisions and more accurate budgeting and scheduling, (Oracle white paper,2010). Risk assessment is critical to understanding the impact of risk and uncertainty on project schedule and cost. Once risks are identified and assessed, the next step is to develop a response plan. Typical mitigation actions include adding time to the schedule, deploying more resources on the project, bringing in outside expertise, increasing the budget, just to mention a few. Uncertainty is an inevitable aspect of most projects, but even the most proficient managers have difficulty handling it. They use decision milestones to anticipate outcomes, risk management to prevent disasters and sequential iteration to make sure everyone is making the desired product, yet the project still ends up with an overrun schedule, overflowing budget and compromised specifications. Or it just dies. Unforeseen uncertainty makes contingency planning more difficult because the project team cannot anticipate everything. Because it is impossible to create a complete contingency plan, the plan must evolve as the project progresses. With unforeseeable uncertainty, a lot of time and effort must go into managing relationships with stakeholders and getting them to accept unplanned changes. Stakeholders often dig in, causing resistance and conflicts. Failing to address risk and uncertainty can lead to consequences that span the spectrum from mere inconvenience to grave danger, ( The article went on to explain some of the effects that risk has on the mining and metals companies projects. Failure to deliver against agreed plans — Realized delivery risks will typically impact one or more of a project's cost, schedule, scope and quality parameters. Where impacts represent a material variation from approved plans, a critical review of the project's alignment to Business Case assumptions and rationale may be required. Late-stage Business Case modifications have the potential to undermine the project's investment case and severely impair stakeholder buy-in and confidence. Loss of competitive advantage — For many mining and metals companies, the ability to efficiently and predictably operationalize assets and infrastructure forms a key source of competitive advantage. As commodity prices, commercial terms and the competitive landscape constantly change, the window for timely project delivery is finite. When...

References: Oracle white paper, A Standardized Approach to Risk Management Improves Project Outcomes and Profitability, April 2010 Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A.
Dennis P. Slevin and Jeffrey K. Pinto, Balancing Strategy and Tactics in Project Implementation ', Sloan Management Review, Fall, 1987, pp. 33-41,
Kenneth K. Humphreys, Project Risk Management - Advantages and Pitfalls Pe Cce Dif, n/d.
Schultz, R. L. and Slevin, D. P. "Implementation and Management Innovation," in Implementing Operations Research and Management Science, ed. Schultz, R. L. and Slevin, D. P. (Elsevier. New York, 1975), pp. 3-22.
Manley. J. H. "Implementation Attitudes: A Model and a Measurement Methodology." in Implementing Operating Research and Management Science, ed. Schultz. R. L. and Slevin, D. P. (Elsevier. New York, 1973), pp. 183-202.
Oracle White Paper, The Benefits of Risk Assessment for Projects, Portfolios, and Businesses,June 2009. Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A.
Bauer M. Project Success Factors. Retrieved from on 21March 2014.‎
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Ernst & Young Global Limited, Effective mining and metals capital project execution,The consequences of risk. U.K Retrieved from on 19 March 2014.
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