Risk management principles

The basic principle of risk management is to inform those involved within the project's decision-making process what to look for, what are the key elements to be aware of, who is allocated the specific responsibility for the risk, and what they should do then if action is required. Once the appropriate plans are in place, guidance is provided to assist in the assessment of the issue, together with the appropriate action to take. If an issue can be identified and resolved at a low level, the quicker and easier it can be dealt with, as long as there is a coherent response plan to follow. Escalation of an issue remains vital within this process, because further risk planning or analysis may be needed to reduce or eliminate the potential impact to the project. The risk factors to be assessed and analyzed link the probability that an event will occur to the proposed impact if the event takes place. The individual processes (and the process groups to which they belong) contained within risk management are shown in Table 11.1.

Table 11.1. Six project risk management processes

Process Group
Initiating	Planning		Executing	Monitoring and controlling		Closing
	1	Risk management planning		6	Risk monitoring and control
	2	Risk identification
	3	Qualitative risk analysis
	4	Quantitative risk analysis
	5	Risk response planning

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