Risk Management 101

Risk Management is one of the most important aspects of Project Management. Project Managers spend significant amount of project time and resources on risk management. In this article, lets go through the basics.

Risk

A future event that may have an impact on the project

• If impact is negative, it is a negative risk or simply a “risk”
• However, impact could be positive as well and thus some refer to it as positive risk or “opportunity”

Risk Value = Probability of occurrence of the event x Impact of the event

Common Risks

Staff turnover

Experienced staff will leave the project before it is finished

Management change

There will be a change of organisational management with different priorities

Hardware unavailability

Hardware that is essential for the project will not be delivered on schedule

Requirements change

There will be a larger number of changes to the requirements than anticipated

Specification delays

Specifications of essential interfaces are not available on schedule

Size underestimate

The size of the system has been underestimated

Technology change

The underlying technology on which the system is built is superseded by new technology

Product competition

A competitive product is marketed before the system is completed.

Risk Management

Risk management is the act or practice of dealing with risk. It is proactive rather than reactive. Risks change through out the life of a project and thus need constant monitoring and mitigation

Risk identification

By brainstorming, experience, past projects, expert judgment

Risk assessment

Assess the probability and impact of these risks

Risk treatment

Draw up plans to mitigate the effects of the risk

Risk monitoring

Monitor the risks till closure