The PMBOK defines Risk Management as “The systematic process of identifying, analyzing, and responding to project risk”. That being said, what is project risk? A project risk is an event that, if it occurs, causes either a positive or negative impact on a project. Not to be confused with issue management, which addresses those factors that are already causing impacts, risk management is about identifying potential risks and mitigating or managing them.
Elements of Risk Management
The purpose of risk management is to identify, address, and eliminate sources of risk before they become threats to successful completion of a project. Risks can be addressed at any of several levels.
1. Confrontation — Addressing risks only after they have become problems. Also called crisis management.
2. Reaction — Detect and react to risks quickly, but only after they have occurred.
3. Mitigation — Plan ahead of time to provide resources to cover risks if they occur, but do nothing to eliminate them in the first place.
4. Prevention — Implement and execute a plan as part of the software project to identify risks and prevent them from becoming problems.
5. Elimination — Identify and eliminate factors that make it possible for risks to exist at all.
A good project manager addresses schedule risks at levels 4 and 5 rather than at levels 1 through 3. The project is heading for failure if a project managers daily activity is addressing risks at level 1, 2, or 3.
Read more at PM World Today.