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The role of risk management in project execution
The role of risk management in project execution
Project risk management responsibilities
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1. Theory and main concepts of Risk 1.1. Risk Risk is the potential for unwanted or adverse effect or consequences to life, property or health, probability of frequency of an event multiplied by the impact or consequence of the event and uncertain event or condition that if it occurs has a positive or negative effect on the project objective. Risk is the possibility that something unpleasant will happen (Oxford dictionary). Risk’s origin refers to the French word “Risque”, to the Italian words “risco”, and “richiare” (Hay-Gibson, 2009, Cited in Lemieux, 2010, P.200), it has an origin in Portuguese meaning “to dare” (Althaus, 2005; Hey-Gibson, 2009; Lemieux, 2010). Initially the definition of concept of risk was loss or hazard to the person, …show more content…
In some situations, risk arises from the possibility of deviation from the predefined strategy or event when there is at least the possibility of negative consequences. - Joint Technical Committee OB-007 (Standards Australia/Standards New Zealand, 2009,p.l) defines risks as the effect of uncertainty on objects causing a deviation from the expected-positive and/or negative aspects. - The quantitative engineering definition of the risk is: Risk = (probability of an accident) X (losses per accident)” (Agrawal, 2009, P.2.7)” In general, two main aspects of risk are uncertainty and consequences and the two major parameters of defining the risks are probability of the risk and the severity of the risk. 1.2 Project Risk - Thompson and Perry (1992, P.3) define the project as a new structure, system or service and also a substantial renovation extension or replacement. - Based on Boyce (2003) a project is a certain type of service which gathers different products together in order to active an inclusive …show more content…
A cause may be considered as an assumption, condition, constraint, or a requirement that makes the probability of positive or negative results, and project objectives consist of cost, time, resource, scope and quality. 1.3 Project risk Management Project risk management is the process of identifying, analyzing, and responding to risk throughout the life of a project and meet project objectives. The objective of the project risk management is to increase the probability and impact of positive events (opportunities), and decrease the probability and impact of negative events (threats). “Thompson and Perry (1992) state that the aim of applying risk management is not to remove all of the risks from the project, but to ensure that all risks are managed effectively. This approach provides many benefits for various types of enterprises, some examples are: - “Improvement of decision-making methods in order to be less subjective and more systematic; - Enable the projects to be compared together for sturdiness against particular uncertainties; - Illustrate the importance of any single
In order for project and program managers to create and execute successful projects, they must fully understand the importance of identifying and dealing with risks associated with their projects. According to Bezzina, Grima, and Mamo (2014), “effective risk management frameworks and strategies are developed with the intention of improving performance, and creating the baseline for the continuity of uninterrupted efficient business processes through risk management good practice” (p. 593).
Well-Stam, D. . (2004). Project risk management: An essential tool for managing and controlling projects. London: Kogan page.
After the results have been reviewed, determinations are made to prioritize the risks according to their level of impact. The eradication of every risk is impossible therefore the risk acceptance strategy is commonly employed in business. Money, time, and resources are probable reserve measures which are applicable to unknown opportunities and threats. High-risks techniques can be substituted to reduce the impact of risks. A change in the project management plan which results in the elimination of a risk is defined as an avoidance response strategy.
A risk can be involved with so many things whether it’s good or bad. It sometimes results in an expected outcome or just an event that is horrible and unpredicted. It is important in life to take chances
Hillson, D, & Simon, P. (2012). Practical project risk management: The ATOM methodology (2nd ed.). Vienna, VA.: Management Concepts.
Risk is the possibility of injuries or accidents occurring in your settings. Every individual health and social care settings has its own hazards which poses a potential risk. Risk assessment must be use to evaluate and minimise the risk if they are inseparable from the person centred care of the user. The risk factors in the care setting could have psychological, social, financial and physical instabilities.
PMI (2000) characterizes the WBS to be the form of grouping project elements known as deliverable -oriented which defines and organizes the entire scope of the project. In line with that, Hilson (2012) has mentioned that RBS could be considered as a progressively structure description of the well-known risks of the project classified according to risks categories. In project administration terms, risks incorporate anything spontaneous and unanticipated outcome that can negatively affect the venture's cost, time or quality. An experienced and knowledgeable project manager ought to have the capacity to deal with the risks successfully and get the project on
Risk is something that generally entails the potential of loss, and also the potential of gain. A risk is undertaken when the end result is considered to be greater than the potential damage that could be done in the event that the end result is not reached. The decision depends upon the level of fear of the individual and how likely they feel the opposing development inherent within the risk to occur. Individuals in today’s society go against their self-control and voluntary perform risk to see how far they can push their limits (Lupton, 1999).
In every project there are always some universal characteristics that will be shared. They all have a comprehensible and established purpose and very distinct life durations. Overall, all projects are doing something that may possibly be new or yet a one time endeavor but have explicit requirements which include; time, price, and performan...
Planning Phase: identify and evaluate risks, develop a strategy, and identify risk activities (Indian Health Services, 2013). Execution Phase: execute risk activities, track and report progress, and review and reevaluate risk periodically (Indian Health Services, 2013). When evaluating risks, the project team should conduct an assessment to determine the importance and impact of the risk to the overall project (Indian Health Services, 2013). This can be done by using a rating system: Identify risks as either high, medium, or low for both probability of occurrence and the potential impact. Next, the risk should be assessed by using a numerical score to identify the likelihood of the occurrence by its potential impact (Indian Health Services, 2013). Using these techniques can prevent and/or mitigate those risks listed above. According to Michael Stanleigh, CEO of Business Improvement Architects “proper risk management will reduce not only the likelihood of an event occurring, but also the magnitude of its impact” (Stanleigh, n.d.) He also talks about how the outcome of the risk can either be acceptable or unacceptable thus, the project team can identify which risks must be mitigated or accepted (Stanleigh,
Risk management is among the most important practices in the field of project management. A successful project completion and risk management often go side by side. An interesting aspect of project management is that a project can sti...
A risk assessment is the “process of identifying potential risks, quantifying their likelihood of occurrence, and assessing their likely impact on the project” (Wideman, 2002). This process is quite time intensive and there are many different varieties dependent on the situation. For example, the US Army uses Risk Management (RM) as a tool to analyze and dev...
This paper will reflect on the different uses of Project Risk Management and ways in which it can benefit organizations to have the ability to identify potential problems prior to the problem occurring. Risk, this is not something to be taken lightly whilst dealing with matters that include high end projects meeting specific details, deadlines and expectations for the end client. Project risk management teaches one to be aggressive early on in the phases of planning and implementing the tools for a project. This is usually easier as costs are less and the turnaround time to solve the issues at that present moment is beneficial rather than later. The result in a successful project for one’s self and other key people involved in the process is also another requirement. Stakeholder satisfaction is important because the
A hazard is a potential damage, adverse health or harm that may effects something or someone at any conditions. Other than that, the risk may be high or low, that somebody could be harmed depending on the hazards. Risk assessment is a practice that helps to improve higher quality of the develop process and manufacturing process. It is also a step to examine the failure modes of the product in order to achieve higher standard of safety and product reliability. Unfortunately, it is common that a product safety risk assessments are not undertaken, or not carried out effectively by manufacturer. Mostly an unsafe and unreliable product was produced and launched on to the market. Thus, the safety problems are mostly identified after an accident happened or after manufacturing problems arisen. In order to prevent risk, a person should take enough precautions or should do more to prevent them because as a user should be protected from harm that usually caused by a failure for whom did not take reasonable control measures.
Risk Management allows us to identify the problems which are unknown during the start of the project but may occurs later. Implementing an efficient risk management plan will ensure the better outcome of the project in terms of cost and time.