The Importance of Project Risk Management

Risks are events that have the potential to occur but may not. Risk management is an integral process in the field of project management that focuses on minimizing threats or negative events, maximizing opportunities, and managing them proactively in order to bring the project to a successful conclusion. It is a core duty of the project manager and it is important that a risk management plan be put in place for each project.

It should be noted that all risks are not negative but can be positive as well. For example, a software project is expected to take three months to complete. By using a new development tool, the project may be completed in half the time, however there is a learning curve associated with the tool and significant time may be needed for developers to feel comfortable using it. A positive risk has the potential to provide future value to the project.

Managing risks, either positive or negative, includes identifying the risk, determining its potential impact to the success of the project, and determining the probability that it will occur. If the risk has a probability of 100% it is sure to occur and is not a risk but an issue and should be part of your issue management plan.

Once you have discovered and quantified your risks, a plan is developed to document how you will deal with them should they occur. The full team typically identifies risks during a brainstorming session or, individual subject matter experts may work with subsets of the team. Some project managers focus only on high-level risks while others develop their plan to deal with any risk that may arise.

While the individual risks will be different, the risk management process is similar for any project whether it is an audiovisual, construction, information technology, or other type of project. Once the requirements are identified, it is important to determine what, if any, threats could affect the project and develop a response that will minimize their impact.

A carefully and thoughtfully developed risk management plan can make the difference between a successful project and one that is riddled with problems, goes over budget, takes longer than expected or, simply does not reach completion. Risk management is an important part of any project and the time spent initially developing your risk plan will save you time, money, and many headaches as the project moves forward.