A risk is an uncertain thing or event that can potentially bring positive or negative consequences. A risk therefore combines certain levels of probabilities and their consequences. If an event or thing is sure to occur yet does not present any effect, it is not a risk because it has no impacts. Alternatively, if it is bound to happen, it is a risk no more but already an issue or a problem. In terms of project management, a risk is any factor that can potentially impede the project’s completion or success.

There are unlimited risk areas in project management. These risks normally concern undefined scopes and possible changes with:

• Untested method or technology
• Known yet still unresolved technical difficulty
• Ambitious goals
• Inexperienced personnel
• Poor planning
• Exterior interfaces
• Optimistic estimate of costs
• Lax scheduling

Hence, a risk is not a problem, but a recognition that problems may transpire. Project teams can avoid these problems by managing, recognizing and addressing risks with proper and timely actions. Risk Management starts with Risk Identification, or naming and describing the risks. This phase is best done through brainstorming, reviewing a standard risk list and recalling the risks encountered in previous similar projects. It is also an inventory that allows teams to record all possible risks.

Risk Quantification follows with evaluations of the risks’ odds and results (or classification of the risks according to their magnitudes). Risks that have high probability yet low impact are put in medium priority. However, risks that are unlikely to occur but will greatly influence the project are considered main concerns. Another factor that should be given weight are their durations. For instances:

• The remote chance of losing a client will significantly distress the project; thus, it will be highly prioritized.
• The possible laziness of a rank-and-file staff will be of medium priority.
• The expected yet minor headache of a member will be given low priority.

Risk Response subsequently allows project teams to avoid risks by eliminating, transferring or mitigating them. In this part, not-so-worthwhile risks can simply be accepted and disregard. Risk Control, on the other hand, is the final step where even new risks and problems can be detected. It means regularly monitoring the risk to ascertain any change in their statuses.

Not all project teams have sufficient risk management plans because of cultural or bureaucratic reasons. Either way, this deficiency gives them unclear or no vision of the risks they face. Risk Management thus must be integrated within each project phase. Without it, teams cannot counter risks with improved methods and systems. They also cannot immediately employ contingencies to minimize the risks’ upshots.

Almost every endeavor in today’s project management world involves risks: competitors arise, customer behavior change, natural disasters occur, employees resign, technologies fail, and expenses increase. However, formal analysis and management can develop strategies to control these risks and their disruptions. It is a very powerful method to ensure the project’s success at all levels.

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