Risk Management In Project Management

Risk Management in Project Management

Introduction

Risk can be defined as a measure of the chance that a project goal that is defined will not be achieved. A project is a laid down plan to come up with a new thing that haven’t been done in an organization before and will not be done again in the future. Risk management involves the process of identifying, accessing, and prioritizing of risks followed by the evaluation of the risk so that the risk that is taken will have the minimum effect in case the worst happens. If a risk takes place, it may have some positive effects or some negative effects. There are four steps that are mainly involved in risk management planning. These include identification of the risk, quantification of the risk, response to the risk, and the control and monitoring of the risk.

Risk Identification

The first stage involves the identification and naming of all risks that are available (Harold, 2006). Great thinking is required for this case so that the final answer will have the least impact if it happens. The risk that will be taken depends on the project that is being evaluated. All projects have a chance of making some generic risks. In defining risks, the exact cause of a risk is the first step that takes place followed by the impact that the risk I it happens.

Risk Quantification

When all the available risks are identified, an assessment must take place so that the extent of the loss if the risk occurred is estimated and the probability that the risk will occur is also known. Quantification involves the assessments of the impact of the risk, and the assessment that the risk will occur so that the owner decides if he or she is still willing to make the risk (Harold, 2006). The whole process of assessment is aimed at helping the individual take some counted

Risk Management in Project Management

risk.

Risk Response

This is the action that the risk taker is willing to take. This is usually done after the identification and assessment of all the possible risks. There are four categories of methods that can be used in the management of a risk. The first is the avoidance of the risk whereby an individual or a company avoids taking any steps that could lead to risks. The second category involves transferring the risk so that another person or company is responsible. Mitigation of the risk is another step that can be taken and this will ensure that the impact is reduced if the risk occurred or the probability that the risk will occur will be reduced (Harold, 2006). The last category is the acceptance of the risk. Acceptance mostly takes place if the effect of the risk is so small that any efforts that are used in avoiding, transferring, or mitigating the risk is not worth it.

Risk Control

Risk control involves a continued observation of the risks with time so that if any unexpected changes occur, the necessary step will be taken (Harold, 2006). Regular risk interviews help in the identification of new risks, assessment of risk probability and impact, and removal of passed risks.

Conclusion

Risk management in project management is very important as it helps in reducing the chance of an individual or a company incurring big losses due to uncalculated risks. Risk identification in project management helps in identifying all possible risks so that the risk that will be taken will have the least negative impact. Risk quantification involves the assessment of all the identified risks so that the extent of the loss that is likely to occur if the risk took place is known. Also, it

Risk Management in Project Management

helps in determining the probability that the risk will occur. There are four ways in which one can respond to a risk. These are avoid, transfer, mitigate, or accept the risk.

References

Harold, K. (2006). Project Management: A Systems Approach to Planning, Scheduling and

Controlling                                          . Wiley Publishers. 65, 158, 392, 741-743, 753-754, 796, & 995.