Introduction to Project Risk Management

Introduction to Project Risk Management

Introduction to Project Risk Management
Introduction to Project Risk Management 
Project risk management remains a relatively undeveloped discipline, distinct from the risk management used by Operational, Financial and Underwriters' risk management. This gulf is due to several factors: Risk Aversion, especially public understanding and risk in social activities, confusion in the application of risk management to projects, and the additional sophistication of probability mechanics above those of accounting, finance and engineering.

With the above disciplines of Operational, Financial and Underwriting risk management, the concepts of risk, risk management and individual risks are nearly interchangeable; being either personnel or monetary impacts respectively. Impacts in project risk management are more diverse, overlapping monetary, schedule, capability, quality and engineering disciplines.

Learning Objectives:
  1. Understand what risk is and the importance of good project risk management 
  2. Discuss the elements involved in risk management planning and the contents of a risk management plan 
  3. List common sources of risks in information technology projects
  4. Describe the process of identifying risks and be able to create a risk register 
  5. Discuss the qualitative risk analysis process and explain how to calculate risk factors, create probability/impact matrixes, and apply the 
  6. Top Ten Risk Item Tracking technique to rank risks
  7. Explain the quantitative risk analysis process and how to apply decision trees, simulation, and sensitivity analysis to quantify risks 
  8. Provide examples of using different risk response planning strategies to address both negative and positive risks 
  9. Discuss what is involved in monitoring and controlling risks 
  10. Describe how software can assist in project risk management

The Importance of Project Risk Management:

Project risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives.

Risk management is often ignored in projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates.

Project Risk Management Processes:

  • Planning risk management: deciding how to approach and plan the risk management activities for the project 
  • Identifying risks: determining which risks are likely to affect a project and documenting the characteristics of each 
  • Performing qualitative risk analysis: prioritizing risks based on their probability and impact of occurrence
  • Performing quantitative risk analysis: numerically estimating the effects of risks on project objectives 
  • Planning risk responses: taking steps to enhance opportunities and reduce threats to meeting project objectives 
  • Monitoring and controlling risks: monitoring identified risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project
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