The Role of Risk Management in Project Management

Topics: Risk management, Project management, Risk Pages: 5 (1617 words) Published: December 6, 2012

Risk is an uncertain event or a set of circumstances whose occurrence will have an impact on achievement of one or more of the expected project goal and objectives. Probability – A risk is an event that "may" occur. The probability of it occurring can range anywhere from just above 0 percent to just below 100 percent. Impact – A risk, by its very nature, always has a negative impact. However, the size of the impact varies in terms of cost, time, quality and other critical factor.

Risk Management.
Risk management is the process of dealing with risk. It includes planning for risk, assessing (identifying and analyzing) risk issues, developing risk handling strategies which include risks Avoidance, Mitigation , Transfer or Acceptance and monitoring risks to determine how they have changed The Risk Impact/Probability. * Risk planning is the process of developing and documenting an organized, comprehensive, and interactive strategy and methods for identifying and analyzing risk Issues, developing risk handling plans, and monitoring how risks have changed * Risk identification is the process of examining the program areas and each critical technical process to identify and document the associated risk. * Risk analysis is the process of examining each identified risk issue to estimate the likelihood of a risk and predict the impact on the project. * Risk assessment: risk assessment refers to the process of identification, evaluation and comparison against the expected standard and determining the acceptable level of risk * Risk Handling: Risk handling refers to the processs of responding to a negative risk, the response to an identified risk reduces the impact of the risk. There are four main ways of responding to risks Avoidance, Mitigate, Transfer or Acceptance * Risk monitoring is the process of systematically tracking and evaluating the performance of risk handling actions against established benchmarks throughout the acquisition process and provides inputs to updating risk handling strategies. Project Management

Project Management is a group of activities embodied in a process of getting things done on a project by working with project team members and other project stakeholders in order to attain project schedule, cost, and technical performance objectives NATURE OF RISK IN PROJECT MANAGEMENT

Risk is inherent in many forms throughout the project, and is both positive and negative. If projects didn't allow for some degree of risk, great discoveries and inventions would never have been made.All projects have probability or degree of uncertainty. The following characteristics that are common in all projects and the environment in which the project are conducted that is within the organization and the environment outside the organization make projects to be risky: * Uniqueness. Each and every project has some elements that have not been done before, and there is uncertainty associated with these unique project elements. * Complexity. Projects are complex in a variety of ways, and are more than a simple list of tasks to be accomplished or done. There are various kinds of complexity in projects, including technical, commercial, interfaces or relational, each of which brings risk into the project. * Assumptions and constraints. Project scoping involves making a range of guesses about the future, which usually include both assumptions (things we think will or will not happen) and constraints (things we are told to do or not do). Assumptions and constraints may turn out to be wrong, and it is also likely that some will remain hidden or undisclosed, so they are a source of uncertainty in most projects. * People. All projects are performed by people, including project team members and management, clients and customers, suppliers and subcontractors. All of these individuals and groups are unpredictable to some extent, and...

References: Chris Chapman and Stephen Ward; Managing Project Risk and Uncertainty, John Wiley & Sons, Inc. (2002),
Harold kerzner, Project Management; A Systems Approach to Planning, Scheduling and controlling, 9th Edition, John Wiley & Sons,Inc (2006)
David Hillson, Managing risk in project; Fundamentals of project management, Gower publishing ltd 2009,
Extracts from the document PD ISO/IEC Guide 73: 2002
David Wheater, Effective ways of Managing Risk in Project Management, Published February 9, 2012
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