Introduction to Project Risk Management Processes

Project Risk Management and Project Management 

All projects are uncertain since they are based on assumptions and constraints.  

This basic characteristic of a project differentiates the role and explains the relationship 
between project risk management and project management.  

1. Project management controls the uncertain environment through the use of structured and disciplined techniques.
2. Project risk management is an approach by which the uncertainty can be understood, 
   assessed, and managed within projects.
3. Project risk management is an integral part of project management.
4. Project risk management is fundamental for the effective implementation of project management.
5. The outputs of project risk management are integral to many project management processes.
6. The inputs of project management processes are essential for the effective implementation of project risk management.

Project Risk Management Processes 

Project Risk Management processes describe a structured approach for understanding and managing risk on a project. 

The steps that have to be followed for an effective Project Risk Management are given below: 

1. All projects are exposed to risk only because of their objectives. Therefore the objectives of a project must be clearly defined for the successful implementation of Project Risk Management. 
2. The Project Risk Management process should have a clear framework against which identified risks can be assessed. 
3. The Project Risk Management process always starts with the initiation step. This ensures that the project team and stakeholders have a common approach toward risk management. 
4. The objectives, activities, resources, and attention of Project Risk Management should be appropriate to the project’s objectives.
5. The outputs from the initial step of the project should be documented, communicated to and then reviewed by the project stakeholders. This will underline the objectives of Project Risk Management.  
6. The next step is to identify risk using risk identification techniques. 
7. All the identified risks should be recorded.  
8. The identified risks should be evaluated using qualitative and quantitative techniques. 
9. Once the risks are prioritized, risk responses should be developed using strategies that can be achievable, affordable, cost-effective, and appropriate.
10. The documented risk responses should be implemented accordingly and should be repeated throughout the project life cycle.  

The six processes of Project Risk Management are:  

• Plan Risk Management  
• Identify Risks
• Perform Qualitative Risk Analysis  
• Perform Quantitative Risk Analysis  
• Plan Risk Responses 
• Monitor and Control Risks