Project Risk Management

Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives. Overall project risk is the effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks, representing the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

Project risks are divided into two categories: negative and positive risks. Negative risks are threats, positive risks are called opportunities. Negative risks can harm project objectives while positive risks can benefit the project objectives.

There are two types of risks: individual risk and overall project risk. Individual risks are specific events or conditions that may affect project objectives. Individual risks can positively or negatively affect one or more of the project objectives, elements, or tasks.

Risk management planning is the process of defining how to conduct risk management activities for a project. The key benefit of this process is that it ensures that the degree, type, and visibility of risk management are proportionate to both risks and the importance of the project to the organization and other stakeholders.

Identifying risks means the process of identifying individual project risks as well as the sources of overall project risk and documenting their characteristics

The purpose of risk identification is to identify risks to the maximum extent that is practicable. The fact that some risks are unknowable or emergent requires the Identify Risk process to be iterative, repeating the Identify Risks process to find new risks which have become knowable since the previous iteration of the process

• Document analysis
• Brainstorming
• Interviews
• Root cause analysis
• SWOT analysis
• Assumption Analysis
• Checklists

Risk Register appears at the end of the risk identification process. Risk Register is a document that lists the risks that you defined in the project. Risk Register is an important input for the project risk management processes.

Qualitative Risk Analysis is the process of prioritizing individual project risks for further analysis or action by assessing their probability of occurrence and impact as well as other characteristics. The key benefit of this process is that it focuses efforts on high-priority risks.

• Expert Judgement
• Interviews
• Interpersonal and team skills
• Meetings
• Risk categorization
• Risk data quality assessment
• Risk probability and impact assessment

Project planning processes serve several purposes, but probably the most important for risk management is to differentiate the parts of the work that are well understood, and therefore less risky, from the parts where you are clueless. Often, what separates an impossible project from a possible one is isolating the most difficult work early, so it receives the attention and effort required to deal with it.

Performing Quantitative Risk Analysis is the process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives.

• Interviews
• Expert Judgement
• Assumption analysis
• Sensitivity analysis
• Decision Tree Analysis
• Simulations

Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks.

• Removal
• Transferring risk and insurance
• Mitigation
• Acceptance

• Exploit
• Share
• Enhance an opportunity
• Accept

The purpose of the implementation of risk responses is to execute agreed risk strategies. In this process, planned strategies are implemented. The individuals or groups that implement these strategies may not be part of the project team. They may be outside the project team or outside the company. Therefore, project managers should ensure that the necessary strategies for risks are implemented by negotiating with stakeholders, guiding them, and raising their awareness

Monitoring Risks is the process of monitoring the implementation of agreed-upon risk response plans, tracking identified risks, identifying and analyzingnew risks, and evaluating risk process effectiveness throughout the project

The following activities are carried out in the risk monitoring process; Monitor warning signs that risks may arise, control risks using identified responses, identify and analyze emerging risks.

• Risk Audits and Meetings
• Data analysis
  • technical performance analysis
  • reserve analysis