Project Risk Management – Overview

This process focused on conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. It helps increase the likelihood and impact of positive events, and decrease the likelihood of negative events in the project.

• A risk can have a positive or negative impact on a project’s scope, schedule, cost, and quality.
• Known risks have been identified early on and can have a planned risk response.
• Unknown risks can’t be managed proactively and maybe assigned a management reserve.
• Issue = a negative project risk that has occurred.
• Overall project risks = affects the project as a whole.
• Each organization has a varying degree as to how they accept risk based on risk attitudes and can be classified into three themes:

1)      Risk appetite – degree of uncertainty and entity is willing to take on in anticipation of a reward

2)      Risk tolerance – degree, amount, or volume of risk that an organization or individual will withstand

3)      Risk threshold – refers to measures along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that level –risk will be accepted. Above this level – they will not tolerate that risk.

• Positive and negative risks are also known as opportunities and threats.

This Knowledge area covers six process groups.

1)      Plan Risk Management – Defines how to conduct risk management activities for a project

2)      Identity Risks – Determines which risks may affect the project and documenting their characteristics

3)      Perform Qualitative Risk Analysis – prioritize risks for future analysis or action by assessing and combining their probability of occurrence and impact

4)      Perform Quantitative Risk Analysis – numerically analyzing the effect of identified risks on overall project objectives

5)      Plan Risk Responses – develop options and actions to enhance opportunities and to reduce the threats to project objectives

6)      Control Risks – Implement risk response plans, track identified risks, monitor residual risks, identify new risks, and evaluate risk process effectiveness throughout

Source: PMBOK 5th ed.