Project Management

[ Project Management Topics ]

Project Risk Management

It is generally not possible to eliminate all risk in a project. Thus, a project manager needs to identify, analyze, and respond to project risk and determine levels of acceptable risk tolerance. Risk can be both an opportunity or a threat to project objectives. Generally this consists of six processes as defined by the Project Management Institute (2000):

  1. Risk management planning - deciding how to approach and plan for risk
  2. Risk identification - determining what risks may affect the project and the risk characteristics
  3. Qualitative risk analysis - assessing the likelihood and impact of identifiable risks
  4. Quantitative risk analysis - numerically analyzing the probability of each risk and consequence
  5. Risk response planning (risk mitigation)- determining options and actions in the case or risk that improve opportunities and limit threats
  6. Risk monitoring and control - keeping track of identified risks, identifying new risks, executing risk plans, and evaluating effectiveness in limiting risk

What is project risk? Well, "project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective. A risk has a cause and, if it occurs, a consequence. For example, a cause may be requiring a permit or having limited personnel assigned to the project. The risk even is that the permit may take longer than planned, or the personnel may not be adequate for the task. If either of these uncertain events occur, there will be a consequence on the project cost, schedule, or quality. Risk conditions could include aspects of the project environment that may contribute to project risk such as poor project management practices, or dependency on external participants that cannot be controlled." (Project Management Institute, 2000, p. 127)

Risk Powerpoint Presentation

Identifying and mitigating Risk

As a part of risk management, the project team should work to identify risks from the start of the project and then identify what can be done to mitigate or remove that risk.

Some projects will be more risk tolerant than others because there is more potential benefit. However, almost all projects have risks that could stop the project which if addressed could be avoided or minimized. For example, an outdoor concert runs the risk of rain the day of the concert.

In essence, with risk, we can :

Porters Five Forces

Importance/Performance Matrix

Importance/Performance Matrix

Image taken from http://www.ifm.eng.cam.ac.uk/dstools/choosing/import.html

----- REFERENCES -----

Project Management Institute (2000). A Guide to the Project Managment Body of Knowledge. Newton Square, PA: Project Management Institute, Inc.