Risk is inevitable when undertaking projects. However, the project manager must ensure that risks are kept to its minimal. The project manager must also have contingency plans to mitigate risk when they occur. Project risk are events that happen that can positively or negatively affect the success of the project. We generally have two types of risk. We have positive risk and negative risk. Positive risk is an upside opportunity for the project. Negative risk is an uncertain event that has a negative impact on the project.
Project risk management can be broken down into the following:
- Risk Identification
- Risk Qualification
- Risk Response
- Risk Monitoring and Control
It is very difficult when it comes to identifying and naming risks that is possible to occur during the execution of a project. Risks can be identified through processes like brainstorming or strategies. Resource risk occurs when the people used for a project do not have the required skills to undertake the project. Budget risk occurs if there is the tendency for the cost of project exceeds the budget of a project.
Risk can be evaluated by quantifying the risk. Risk quantification is important because it helps the project manager analyze the likely chances of that risk occurring. Matrices can be used to quantify the possibility of risk occurring. Risks can be quantified as low, medium, critical or high depending on the possibility of it occurring.
Risk responses can be categorized into the following:
- Acknowledge the risk
- Pass on the risk
- Take corrective measures to reduce the impact of the risk
- Avoiding the risk
Risks should be monitored continuously through the project.