Risk management plays an important part within project management. Inadequate risk management could have an impact whether the project will succeed or fail. To get an idea of what risk management is, what is it means and how to use it as a tool for success, first we should ask ourselves a question that:What is risk?
Risk can be described as "the possibilities of suffering harm, loss or danger". In Every project there is the possibility of risk which may affect the success and/or completion of a project. In common understanding we associate a risk with being a problem but this is not right. A risk is not a problem untill it really occurs.
Project risk are those risk which can cause a project to be delayed or to exceed the planned budget. Risk management deals with both aspects of risk-positive and negative. The purpose of monitoring all projects risks is to increase the value of each single activity within the project.
Risk management is a procedure to minimize the adverse effect of a possible financial loss by:
1: Identifying potential sources of loss.
2: Measuring the financial consequences of a loss occuring.
3: Using controls to minimize actual losses or their financial consequences
Risk management is not solely done by the project manager. All relevant stakeholders are involved in keeping an eye on all risks that matter. The risk management identification sessions should include following participants:
> Project team
> Risk management team
> Subject matter experts from other parts of company
> Customers and end users
> Other project managers and stakeholders
> Outside experts
If the project team is aware of the importance of the risk management process, the probability of success will be increased while at the same time failure will become unlikely.