Risk is a measure of the uncertainty that exists in a project.
An uncertain situation that exists in a project is nothing more than a situation that impact on the project cannot be accurately predicted. There is always the probability that the risk will not materialize but if it does materialize then its impact may not be accurately predicted.
Risk may be due to a number of reasons, including the inherent complexity of the project or the limited experience of the project team with similar projects.
Every project involves some kind of uncertainty due to the uniqueness of every project and the natural inability to accurately predict the future. Uncertainty may impact the project progress, may adversely affect the project objectives and in some cases may even cause the cancellation of the project.
Uncertainty is not always bad news. What appears as an uncertain situation to someone may appear as an opportunity to someone else. An uncertain situation may this give rise to business opportunities, which may not be readily apparent or may appear to be too risky.
Risk management is a continues process due to the dynamic nature of a project. To mange the risk, we must have a clear understanding of the risk and its potential effect. Probabilities can be assigned for the occurrence of the risk together with the corresponding risk factor, depending on the best case or worst case scenarios.
Risk management includes the following:
- Document the risk: After the initial analysis and evaluation, the risk should be clearly documented in a way that would enable taking the appropriate action at the appropriate time.
- Monitor the risk: The risk should be monitored as often as needed in order to understand when the risk is a treat to the project. Likewise, the project should also be monitored in order to determine whether there has been a change in the project circumstances which can expedite the rid or climate the risk altogether.
- Update the risk: Updating the risk is important in order for everyone involved to have an updated and clear picture of the risks.
- Finally, Control the risk: Risk controls involves the assignment of personnel to the management of each risk. Every risk must have an owner at every point in time. The risk owner is essentially the risk coordinator and should work closely with the project manger in order to make sure the risk is managed according to the plan.
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