Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive. Risk management will reduce not only the likelihood of an event occurring, but also the magnitude of its impact.
Early in the project there is more at risk than as the project moves towards its term life. Risk management should therefore be done early on in the life cycle of any project as well as on an on-going basis.
The significance of risk management is that opportunity and risk generally remain relatively high during project planning but because of the relatively low level of investment to this point, the amount at stake remains low. In contrast, during project execution, risk progressively falls to lower levels as remaining unknowns are translated into known risks. At the same time, the amount at stake steadily rises as the necessary resources are progressively invested to complete the project.
Risk Management Systems
Risk Management Systems are designed to do more than just identify the risk. The system must also be able to quantify the risk and predict the impact of the risk on the project. The outcome is therefore a risk that is either acceptable or unacceptable. The acceptance or non-acceptance of a risk is usually dependent on the project manager’s tolerance level for risk.
Risk Response generally includes:
The purpose of risk management is to:
How to Do Risk Management
First we need to look at the various sources of risks. There are many sources and this list is not meant to be inclusive, but rather, a guide for the initial brainstorming of all risks. By referencing this list, it helps the team determine all possible sources of risk.
Various sources of risk include:
Violating trademarks and licenses
Sued for breach of contract
Labour or workplace problem
Litigation due to tort law
For more information on risk management, talk to our experts at Augment Management Consultancy today!