The Importance Of Project Risk Management

840 Words4 Pages
The study, it is based on the analysis of present procedure of project risk management that is followed by Spanish Business Unit of an automotive organisation that mainly manufactures airbags modules and steering wheels. Taking into consideration the PMI standard, different changes are needed in present methodology for the objective of defining and implementing project risk management procedure more efficiently and usefully.

Keywords: Project Risk Management; Automotive industry; Risk Procedure; PMI Standard Introduction
In the world of business, the presence of risk is involved everywhere, however the nature of risk and its scope has led to accelerate in 21st century. Risk management is the procedure for analysing, responding and identifying
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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
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The objective is to highlight the risks for management (Hillson, 2009). For this, the literature research suggests huge number of models that uses both quantitative and qualitative assessment methods for project risks.
Risk Response Development
Risk response development involves preventive measures against all threats. Such measures fall into below defined categories;
• Avoidance: eliminating specific danger, this is done through abolishing the problem from the root.
• Mitigation: decreasing the risk cost occurrence through lessening the probability of this incident
• Acceptance: absorbing the consequences

Risk Response Control
For countering occurrences of risk factor at the time of completion of project life cycle, there is a requirement for performing Risk response control that includes the execution of risk management plan (Stultz, 1996).

Project Risk Management Overview

Case Study
The study explains the case of Spanish Business Unit of a British multinational organisation that supplies automotive mechanisms. The organisation employees around 60,000 people in 185 facilities that is located in 26 countries. It is important to notice that the organisation is responsible for supplying to most significant vehicle constructors, producing and developing passive and active safety
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