Key Risk Management Principles

A proactive management philosophy underlies the key principles of project risk management. By effectively managing project risks using these principles, a project manager remains in control of the project at all times, enables better project decisions, and provides the project the best opportunity for success.

The key principles to managing project risks include the following:

• It's all risk management All of project management is risk management. The current approaches and rules of modern project management, especially the ones surrounding portfolio management, project definition, and project planning, are all risk management focused. From past experiences, we now know how to structure a project for total success and how to greatly increase the likelihood the project will achieve its objectives.
• "Healthy paranoia" It's all attitude, even if it is a little psycho. Effective project managers take responsibility for managing risks on their projectbelieve me, no one else wants the job. As a result, you must strike the balance between having a paranoid outlook about your project (constantly thinking about what could go wrong) and doing everything you can to make sure the project is executed as planned.
• Appropriate The level, type, and visibility of risk management should be consistent with the level of risk and the importance the project has to the organization. The cost of the risk response should not be greater than the impact loss the risk event might cause.
• Systematic Any factor or risk that could impact the project should be identified, quantified, and assessed for possible impacts to the project. This includes all people, process, technology, organizational, and environmental influences.
• Continuous The identification of risks is an iterative process. Risk identification is repeatedly performed throughout the project, not just at the beginning.
• Relentless The project manager and the organization must be committed to risk management for the entire project lifecycle.
• Focused Focus on the risks that you can controlstarting with the high priority risks.

Per PMI, project risks can be reduced up to 90% if they are properly managed.