The Project Risk Management Processes

There are six Project Risk Management processes:

Risk Management Planning

Risk Identification

Qualitative Risk Analysis

Quantitative Risk Analysis

Risk Response Planning

Risk Monitoring and Control

Some of these processes are designed to guide the project team through a complete and robust analysis of risks and opportunities. Others assist the team in managing, monitoring, and controlling risks and opportunities. Cost overruns and schedule delays on projects are often attributed to unexpected events (risk events) that were not taken into account.

Risks are either known, meaning that they are identified and analyzed, or unknown, meaning that they are non-specific but expected while at the same time being unidentified and not analyzed. Because of this, schedule and budget contingency cannot be quantified but are part of a general contingency. For example, some projects use a standard amount of contingency for these unknowns, ranging from 10% to 25% of the total budget, with more for higher risk projects and less for more predictable projects. If the project team discusses and focuses on risk frequently, more risks can be identified and responses can be developed.

Q.	Project risk is the uncertainty that an event or condition that affects ________ will be realized.
		A.	Project performance as measured by the functional managers
		B.	Project impact on the organization
		C.	Opportunities the project could realize
		D.	At least one of the project objectives such as cost, scope, time, or quality

The correct answer is D. Project risks affect the ability of the project team to meet its commitments of time, costs, scope, or quality.

Q.

True or False? Risks may have one or more causes and one or more impacts.

The correct answer is true. Risk events such as a delay in receiving a customer's approval to proceed on a design may have multiple causes. For example, a delay in the delivery of documents to a customer for their approval and incomplete information on the documents could cause the approval to be delayed. As a result of the delay, the project schedule, deliverable quality, and project cost all may be negatively impacted.