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 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
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