Steps Of Effective Project Risk Management

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

Risk management is the process where individual and overall risks are understood and managed, thus optimizing success by minimizing the threats and to maximize opportunities [APM Body of Knowledge, p. 179]. All projects are inherently risky, because it performed by people and subject to the external influences or environment. Risk is something that it cannot be predicted. That is why into the company’s organization, risk management has an essential and vital part in any project whether that is in the planning procedure or to project implementation. Risks are always exists and can be translated as an opportunity to gain benefits. In addition a risk may incur serious monetary losses. The first step of risk management begins when identifies risk. These are identified through several techniques that risk management can select and use. One of the most effective techniques is brainstorming where members are attending meetings in order to gain ideas of either to identify a risk or how to overcome the arising risk. However a document review technique is also applied which is also very helpful, in this technique, documents are reviewed from prior projects which leads to a better understanding of the risks that may do occur. If a company seeks risk management capabilities, is to gaining competitive advantage, riskier businesses seek potential and higher profits.

When the manager of project carried out its work plan should take into consideration the possible risks that may occur within the project. The risk is the possibility that occurs a problem within a project and that may cause some change within the same (Heldman, 2011). It should be noted that not all risks are bad since they can be potential opportunities to make some changes that will improve the overall status of the project. In the same way a risk not taken into account in time can create one problem in the project and can completely change the final performance of the project. The project manager can take several elements to identify the risks. Some elements and documents that can be used to identify risks are: search internal risks of the project, such as resources

Risk mitigation would allow the project manager to know the project’s strengths and weaknesses then evaluate the threats facing the project. The project manager would implement different strategies such as lowering exposure to threats or improving strengths of the project to make sure that the variance in schedule and cost is not very high when there are risk event occurrences. A risk mitigation strategy ensures that the project manager, the implementing team, and the project’s stakeholders are on the same page in the project implementation job. It also gives the project team an opportunity to address risks in advance so resolving additional issues becomes easy when the issues occur later during the implementation of the project. Moreover, the risk management strategy would fine-tune the parameters used for measuring the results of the project (Kerzner,

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It

Background- In its most basic sense, risk management identifies, allows assessment, and prioritizes risks that are associated and central to an individual project or organization. Risk management allows the organization to be proactive in preventing or mitigating risks, for improving certain processes within the organization, and with the hope of preventing fiscal exposure. However, in almost every organization there are risks individuals are unique and do not always perform at a high level of safety; mechanical or design failures exist, construction projects have supply or labor issues, there are uncertainties in computer or data modification, of course natural disasters, and even deliberate attacks from competitors, etc. Because this is such a common occurrence, national and even international standards have been developed in conjunction with the insurance and regulatory institutions to at least provide basic guidelines to minimize risks risk (International Organization for Standardization, 2009).

The term risk has been defined in so many ways by many scholars. The term ‘risk’ itself is very broad to interpret. However, risk is often defined as a threat and it usually brings negative impacts to a person or an organisation. Hansson (2005) claims that many attempts have been made to define risk in a single meaning and eliminate other definitions which are futile and a form of ‘linguistic imperialism’. Since there is no exact meaning of risk, people describe risk based on their own perceptions and purposes. Perminova et al. (2008) and the Association of Project Management (APM) define risk as an uncertain event and exclusively negative (APM, 2006). Ward and Chapman (2003) recommend that project risk management (PRM) is categorized as project uncertainty management. Nonetheless, the term ‘uncertainty’ again brings confusion as there is no single meaning that can successfully define it (Perminova et al., 2008). On the contrary, Kaplan and Garrick (1981) define risk according to public’s risk perception. There are three criteria suggested by the authors such as the failure of that particular event, its tendency as well as the impact of the failure. Although there have been countless struggles to picture risk in a proper way, it is best that the focus should be diverted to a more important issue which is how to manage risk instead of defining it as time may not be on our side.

Risk Management Procedure: Defining and summarizing the steps to respond to the risk during the project life.

Identifying risks will involve the entire project team and will include an evaluation of all factors including the project management plan. Careful consideration to the project deliverables will be given when analyzing the risks. Analysis of possible risks have been prioritized by calculating the risk numerically from 1-10, from less likely to likely to occur and minor impact to severe impact to project success, respectively. A numerical rating is applied to the values of occurrence, outcome, and detection and then calculated to a risk priority number (RPN) to assess the risk to the project.

The purpose of this Risk Management Plan is to establish the framework in which the project team will identify risks and develop strategies to mitigate or avoid those risks. However, before risks can be identified and managed, there are preliminary project elements which must be completed. The purpose of the Risk Management Plan is to establish an approach to monitoring, evaluating, and managing risks throughout the life of the project. A risk is an uncertain event or condition that, if it occurs, has a negative or positive effect on the project’s objectives. The risk management process will identify potential risk sources; assess individual risks and impacts on performance, cost, and schedule; evaluate alternative approaches to mitigate high and moderate risks; and develop action plans to handle individual risks. This document will state the various risks with their classification, mitigation and handling strategies, impact on cost and schedule, and action items.

Project Risk Management – identifies potential risks (good and bad) that can affect the objectives of the project.

In order to perform project risk management effectively, the organization or the department must know the meaning of the risk clearly. With regards to a project, the management must focus on the potential effects on the objectives of the project, for example, cost and time (Loosemore, Raftery and Reilly, 2006). Risk is a vulnerability that really matters; it can influence the objectives of the project

This assignment is included in the 2014 session of the Risk Management module of the MSc in Project Management course at University of Aberdeen. The main purpose of the assignment is to demonstrate my understanding of the issues involved in Risk Management and how they are applied in my current Project environment. The assignment is split in to two questions as detailed below.

The purpose of this research paper is to understand the risks faced by the Information Technology projects and how Risk Management can manage it, in order to complete a project successfully. There are potential possible risks one can come across while implementing a IT project apart from financial aspects. To prevent the unforeseen risks the project manager must analyze risks from all aspects like financial, resource allocation, performance dependencies, vendor dependencies , natural calamities and so on. Day by day the aspects of risks are increasing. So, project managers must be equipped enough to face these new risks. If there is no appropriate or prior risk analysis of these challenges, the corporations might have to face negative