Chapter 11: Introducing Project Risk Management

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Overview

Risk is everywhere. From driving a car to parachuting, risk is inherent in the activities we choose. Within a project, risks are unplanned events or conditions that can have a positive or negative effect on its success. Not all risks are bad, but almost all are seen as a threat.

The risks that activities bring are an exchange for the benefits we get from accepting that risk. If a person chooses to jump out of a perfectly good airplane for the thrill of the fall, the exhilaration of the parachute opening, and the view of earth rushing up, there is a risk that the chute may not open—a risk that thrill seekers are willing to accept.

Project managers, to some extent, are like these thrill seekers. Parachutists complete training, pack their chutes, check and double-check their equipment, and make certain there’s an emergency chute for those “just-in-case” scenarios. Project managers—good project managers—have a similar approach.

Risks in a project, should they come to fruition, can mean total project failure, increased costs, and extended project duration among other things. Risk often has a negative connotation, but like the parachutist, the acceptance of the risk can also offer a reward. For the parachutist, the risk is certain death—but the reward is the thrill of the activity. For project managers, risk can mean failure, but the reward can mean a time or cost savings, as well as other benefits.

Risk management is the process in which the project manager and project team identify project risks, analyze and rank them, and determine what actions, if any, need to be taken to avert these threats. Associated with this process are the costs, time, and quality concerns of the project brought about by the solutions to those risks. In addition, the reactions to risks are analyzed for any secondary risks the solutions may have created.

In this chapter, we’ll discuss risk management planning, risk identification, analysis, response planning, and the monitoring and control of the identified risks. For the PMP exam, you’ll need a firm grasp on these concepts. You’ll be taking a real risk if you don’t know them well.

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