Risk Management 101



Risk Management is one of the most important aspects of Project Management. Project Managers spend significant amount of project time and resources on risk management. In this article, lets go through the basics.

Risk
A future event that may have an impact on the project

- If impact is negative, it is a negative risk or simply a “risk”
- However, impact could be positive as well and thus some refer to it as positive risk or “opportunity”


Risk Value = Probability of occurrence of the event x Impact of the event

Common Risks
- Staff turnover
Experienced staff will leave the project before it is finished

- Management change
There will be a change of organisational management with different priorities

- Hardware unavailability
Hardware that is essential for the project will not be delivered on schedule

- Requirements change
There will be a larger number of changes to the requirements than anticipated

- Specification delays
Specifications of essential interfaces are not available on schedule

- Size underestimate
The size of the system has been underestimated

- Technology change
The underlying technology on which the system is built is superseded by new technology

- Product competition
A competitive product is marketed before the system is completed.

Risk Management


Risk management is the act or practice of dealing with risk. It is proactive rather than reactive. Risks change through out the life of a project and thus need constant monitoring and mitigation

- Risk identification
By brainstorming, experience, past projects, expert judgment

- Risk assessment
Assess the probability and impact of these risks

- Risk treatment
Draw up plans to mitigate the effects of the risk

- Risk monitoring
Monitor the risks till closure

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