High quality project risk management relies on information, common sense, experience -- and to a certain degree -- gut instinct and intuition. Risks are threats to project success. Risks that are both possible and probable must be identified and analyzed to fully understand what can happen, what is likely to happen, and if the worst should occur, what would be the result? This is the essence and purpose of "project risk management". Read on to learn how it works.
Risk management is both a strategy and a process. As a strategy, it embraces the concept that all projects have risk, and the goal is to ensure that those risks are managed to ensure that projects can be completed successfully. Risk is no reason to avoid projects - it's a basis for making decisions about project scope, planning and execution. There may very well be projects that are deemed to risky to proceed, but on the whole, most risks can be managed. That's where the process come in.
As a standardized governance process, project risk management can be broken down into five working elements: risk origination (the risk is identified), risk assignment (responsibility is assigned), execution (risk response is planned and put into action), oversight (status is monitored) and closure (the risk is eliminated).
In practical application, standardized risk management steps can be applied differently within any given operation or project, depending on project needs and organizational capabilities. The ultimate goal of risk management is to create realistic processes for resolving project risks, so that time is well spent, and project results are appropriately protected. Above all, risk management strategies and practices must be well suited to the projects encountered, and to individual organizational needs and capabilities.
What's the benefit of a standardized approach to managing project risk? You get a roadmap to follow, ensuring consistent results, ready to be adapted to the needs of the project at hand. That's the purpose of the 5-phase process described below:
Risk management takes place through multiple phases of the project management process, starting with an initial risk assessment as part of project selection, continuing with a comprehensive risk analysis, as part of project definition, sizing of risk management practices as part of project governance, tracking risks through project oversight, and evaluating risk management results as part of project review activities.
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Strategic fast tracking is a streamlined project management process, used to level the playing field when "project problems" get in the way of on-time success. Our informative "fast tracking" article series explains more:
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