At times we realize the planning in advance for the uncertain events of our life. Just as we plan for unforeseen events in our life, project managers also need to prepare for uncertainties affecting their project. All project management skills of a project manager can fall flat in the face of uncertainties and unplanned problems.
Risk can be defined as the possibility of loss. Risk arises due to the inability to achieve objectives within defined cost, schedule and technical constraints. Risk has two components, one the possibility of not achieving a particular outcome, and the second is the result of failure to achieve the outcome. The former is the probability of risk and the later is the loss.
Risk management is a set of action that help the managers plan to deal with uncertain occurrences. It is through risk management managers assess risk and manage to reduce it to an acceptable level. The key idea in risk management is not to wait passively for a risk to materialize and become a problem. The objective of risk management is to ensure that for each perceived risk we know well in advance how to tackle it.
The process of risk management begins during the analysis phase and the actual process of managing risks continues throughout. Risk management is a dynamic process because it deals with the activities that are yet to happen. Risk management has two fold agenda. First deciding actions for preventing risk from happening and second deciding actions for tackling risk that materialize. Therefore risk management is all about preempting a risk, coming up with a plan for resolving the risk and finally executing the plan.
Risk identification: In this step manager gathers information about the potent ...