The main purpose of project risk management is to obtain better project outcomes by reducing risks and capturing opportunities and thus leading to project success. It is unlikely that a project will be successful without effective project risk management. Voetsch et al. (2004) showed the statistical relationship between project risk management processes and project success. Artto et al.
Project risk Management helps to identify the knowledge gaps and assist in plugging those gaps 4. It helps to ascertain the risks which may be encountered during the day to day operations. It also helps in identifying the environmental, financial, technical, legal and other such miscellaneous risks which may be encountered depending on the nature of the project. 5. Merely identification of the risks is fruitless unless and until a mitigation plan is in place.
Risk management attempts to recognize and manage potential and unforeseen trouble spots that may occur when the project is implemented (Erik W. Larson). So Risk management will be used to attempt to prevent destabilization of the project when unforeseen events occur. Managing risks on projects is a process that includes risk assessment and a mitigation strategy for those risks (Hillson,
Risk Mitigation After project risk is assessed and identified, the project team works on a risk mitigation plan that aims to decrease the impact of any unpredicted event to occur. The various ways project team alleviate risks includes: • Risk transfer • Risk allocation • Risk reduction • Risk avoidance These techniques work out to be an operative tool in reducing individual risks and project’s risk profile. Thus, the plan restores the approach of risk mitigation for every recognised risk events and particular actions that the project management team might take in order to eliminate or reduce risks (Phillips, 2009). Example: Analysis of Project Risk in Equipment Delivery A team of project management evaluated the risk for some essential
Critical analysis of these inputs would help to inform on the necessity of project managers to carry risk monitoring: Risk Management Plan The risk management plan details how to approach and manage project risk and is usually extracted from the project logical framework (Perminova, Gustafsson & Wikström, 2008). The description of how and when monitoring of risks should be done is in this plan. It also provides “guidance around budgeting and timing for risk-related activities, thresholds, reporting formats, and tracking” (Kendrick, 2015). Risk Register This contains the comprehensive risk listing for the project (Rosenau & Githens, 2011) within which the key inputs into risk monitoring and control are the bought into, agreed to, and classified as realistic (Loch, DeMeyer & Pich, 2011). Such a requirement is part of good project management practice where the key lead person is the project manager.
Accomplishing project goals depends a lot on planning, preparation, results and evaluation that helps achieving strategic goals. By outlining risk management processes for the project, we make success more possible by reducing and removing threats so projects can successfully fulfill its original objectives. This also allows us to deliver our project on time, on budget and with the quality results our project sponsor demands. If we don’t have risk management strategies in place, our projects get exposed to problems and become vulnerable. Good risk management strategies allow us to maximize profits and minimize expenses on activities that will not produce a return on
Managing risks means analysing the project works to identify all the risks that may occur and being proactive in devising countermeasures in the event the risks do come to pass. By doing so you can minimize risk and increase the chance of success of a
It is important to note that risk management needs to be conducted from entire lifecycle of the project, from initial phase to decommissioning of the project. Risk management can often contribute to project success from improvement because of the loopholes that were previously uncovered (Zsidisin, 2003). Literature Review At present environment, the modern project management needs project personnel to ensure working knowledge relating to management of risk and details for procurement and contract management for controlling and directing the project towards successful accomplishment. As mentioned by De Bakker & Wortmann (2010), risk works as inescapable partner for project managers, therefore it is important to have skilful and experienced manager, the one that can work efficiently with the contracting managers, subcontractors and purchasing professionals for achieving key objectives. Approaches to Risk Management Normally organisation uses three diverse approaches for risk management, this
The risks and its management are important for the successful implementation and completion of the project. Task 2 Match appropriate resources to a project Many types of resources required for the execution of the project. Finance related resources and human resources are the major
Through all over the world, the risk management process designed to control and manage risks in the organization to ensure the success of the development, improvement and achievement of its objectives. The risk management process is applied to all programs, projects and activities that affect mainly and lead to a radical transformation of the strategic path, the organizational structure, employees, operations and customers. The process is applied to guide through the identification and adoption of the basic goals, gather information, determine the effects, determine the plan of action and risks, discuss and identify key areas of improvement, make major adjustments needed, and evacuation drills are carried out to ensure the effectiveness of the plans. In this paper I will highlight and compare