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.
It is one of the steps in the risk management process. Risk management is a higher-level process, where the senior management and all other departments calculate the risk, decide on the mode of action to handle the risks, execute the designed controls, and monitor the performance of the controls against the set parameters. Risk management includes risk assessment techniques, risk treatment and acceptance methods, and risk communication. The main purpose of this research is how organizations handle their risk management process, what treatment methods is used in Risk management. Methods Qualitative and Quantitative are the two research when carrying out a research.
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,
While preventable risks or internal risks can be managed by clearly laying down rules and norms or compliance based approach, it is necessary for strategic and external risks to having a proper risk management plan. They also tell us that people overestimate their skills regarding their forecast and risk assessment. Organizational and individual biases make the company overlook the risks and incubate them through normalization of deviance. They say that risk management should counter these biases and help the organization to mitigate the risk. Further, they explain how to mitigate strategic risks as “one size does not fit all” which means that every firm has a different way of operating and, therefore, need different structure and role of risk management function.
When an organization like a bank fails to come up with ways of mitigating any risk that they face or could possibly face. The impact of risk can have far-reaching effects on an organization that fails to be prepared. Organizations like banks can benefit from considering their risks especially when it is doing well and when there are indications of market growth. It is advisable for risk management to be used as a preventive measure and not a reactive measure. The risk management process is all about identifying exposures to risks, measuring those exposures and making a decision on how to protect the business from the risks (Kidwell et al., 2016).
This can be identify as the controlling procedure of risks. “Risk management is a process comprising the following main steps: risk management planning, risk identification, risk assessment, risk analysis, risk response, risk monitoring and risk communication” (Baloi and Price 2003) By using risk managementtechniques in a productive way will be given potential benefits. Thosecan be shown in Figure 7 below. Figure 6 Benefits of Risk Management Source:(Burtonshaw-Gunn 2009) (Monir and Sayegh 2008)also define; “risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective, such as time, cost, scope, or quality”. FACTS IMPACT ON PROJECT RISKS Figure 7 Facts Impact on Project Risks Source:(Burtonshaw-Gunn 2009) In this pre planning stage risk should identify properly and need to prepare a proper risk assessment plan.
It is the first step for a successful risk management plan. b) Avoidance- To apply safeguards thereby eliminating the risk problems. Once the associated risks are identified the risk management team can work in accordance to reduce the potential threats. Avoiding items from the business plan that aren’t necessary but can be a risk, is one of the major risk avoidance strategy. c) Risk Loss Control – After taking steps to prevent certain business risks, it’s important to decide a preventive strategy in order to avoid such risks from happening in the near future.
Risk management fundamental in an organization as it is the managing of risks in an organizations operations whereby they do not try to eliminate or avoid the risk but rather harness the opportunities and minimize its threats (Fadun, 2013 & Renn & Walker, 2008). Risk management