Risk Management In Project Management

All projects will at some point in time be exposed to risk irrespective of their magnitude.

Risk management in projects encompasses identifying, quantifying, and managing risks. There is a measure of risk associated with every project. Projects that involve the usage of new technology systems are confronted with the possibility of that technology not being able to perform as expected. Highly complex projects deal with the problem of being able to accurately estimate time and costs; and even the smallest and simplest projects have some element of risk.

While it is a herculean task to eliminate all risks, project managers must strive to identify and manage risks to avoid the failure of a project. Having a risk plan is the solitary way to obtain project endorsement, as it shows the risks as well-defined and controllable.

Risk management is the procedure wherein a project manager and project team identify project risks, analyze and rank the risk, and establish what actions, if any, need to be taken to ward off these threats. Associated with this process are the costs, time, and quality concerns of the project brought about by the answers to those risks.

In this report, I would be discussing what risks are, different types of risks and mitigation techniques in responding to identified risks.

INTRODUCTION

What is a risk?

A risk is something that might take place in the future and may impact a project’s triple constraint (budget, schedule and scope). A risk may or may not happen, nevertheless, it can be planned for based on its probability of occurrence and the probable impact on the project or deliverable(s). Risks can be avoided totally, diminished, or resolved. The impact of a risk on a project can be defused or absorbed thro...

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...ost and time to reduce or eliminate the risks is more cost valuable than repairing the harm caused by the risk. The risk event may still happen, but expectantly the cost and impact of the risk will both be very little.

Mitigation plans can be formed so they are executed should an identified risk cross a given threshold. For example, an oil and gas project may have a mitigation plan to trim down the amount of units created per hour should the equipment’s temperature go above a given threshold. The cutback is the number of units per hour that it may cost the project in time. in addition, the cost of extra labor to run the equipment longer because the machine is now operating at a slower pace may be credited to the project. Should the equipment fail, the project would have to change the equipment which could lead to delay for weeks while awaiting repairs.