Risk Management In Project Contexts: Identifying, Assessing

Risk management in project contexts: identifying, assessing, and responding

This document was originally created on 26th May 2009 and was last updated on 22nd September 2015. The author of this material is Peter Week 9 Project risk management “Selecting the right project is business risk. Managing uncertainty to meet the stakeholders’ objectives is project risk.” (Verzuh, p.82) The focus of risk management in the project management (PM) context is to ensure that project objectives related to cost, schedule, and quality are achieved. The process involves identifying risks, assessing their significance, and managing or responding to them, with repeated cycles throughout the project lifecycle to accommodate changing circumstances and emerging risks.

Verzuh’s model suggests that initial identification captures major risks, while subsequent iterations reveal risks that develop later. Dobie (2007) similarly outlines a risk management process involving risk identification, analysis, response development, and control, emphasizing continuous monitoring for new risks. Organisational risk management frameworks further underpin project risk processes through comprehensive risk registers, integrating project risks into broader organizational risk management systems. The PMBOK (p.238) defines project risk as an uncertain event or condition that, if it occurs, could positively or negatively affect project objectives such as time, cost, scope, or quality.

Understanding risk involves analyzing its sources and potential impacts. Risk event drivers are facts in the project environment prompting belief that certain risks will occur, while impact drivers are factors influencing the severity of potential impacts (Smith & Merritt, 2002). Effective risk management requires assessing the causes and effects of specific risks, whether threats or opportunities, and considering risk attitudes at organizational and individual levels. Dobie stresses the importance of explicit attitudes towards risk, ensuring that organizational responses align with managerial perceptions and cultural norms (Dobie, 2007).

For example, in projects where a fast-track schedule is considered, organizational responses may vary from accepting the risk to accelerate delivery to transferring or avoiding it altogether. The decision hinges on organizational risk attitudes, resource availability, and strategic priorities. A proactive approach entails evaluating the likelihood and impact of risks using quantitative and qualitative measures; models such as the one-minute risk assessment tool (Tiwana & Keil, 2004) facilitate rapid evaluations, aiding timely decision-making.

Risk impact and probability assessments guide the development of mitigation strategies. Measuring the potential effects and likelihoods enables project managers to prioritize risks, allocate resources efficiently, and implement appropriate responses. High-risk projects, especially those with severe potential impacts, demand targeted, proactive management to prevent or minimize adverse outcomes.

The role of the project manager is crucial in navigating risks. Globerson and Zwikael (2002) highlight that project managers are responsible for identifying negative events, developing mitigation plans, and overcoming difficulties to ensure project success. Their leadership directly influences risk responses and overall project resilience. Lessons learned from past projects further enhance risk management practices, fostering organizational learning and continuous improvement (Tiwana & Keil, 2004).

Conclusion

Effective project risk management encompasses a systematic process of identification, assessment, and response to risks throughout the project lifecycle. Recognizing the nuances between threats and opportunities, understanding organizational risk attitudes, and applying appropriate assessment models are essential for ensuring project success. The project manager’s role involves not only technical expertise but also strategic leadership in fostering a risk-aware culture that aligns organizational objectives with project realities. By integrating comprehensive risk management frameworks and lessons learned, organizations can improve their ability to anticipate, mitigate, and capitalize on risks, thereby increasing the likelihood of delivering projects within scope, on time, and within budget.

References

• Carbone, T. A., & Tippett, D. D. (2004). Project risk management using the project risk FMEA. Engineering Management Journal, 16(4), 3-12.
• Dobie, C. (2007). A Handbook of Project Management. Allen & Unwin.
• Globerson, S., & Zwikael, O. (2002). The impact of the project manager on project management planning processes. Project Management Journal, 33(3), 61-68.
• PMBOK Guide. (2017). A Guide to the Project Management Body of Knowledge (6th ed.). Project Management Institute.
• Smith, P. G., & Merritt, G. M. (2002). Managing consulting project risk. Management Consulting, 13(3), 24-32.
• Tiwana, A., & Keil, M. (2004). The one-minute risk assessment tool. Communications of the ACM, 47(11), 74-79.
• Verzuh, E. (1999). The fast forward MBA in project management. John Wiley & Sons.
• Williams, T. (2007). Modelling and managing risk in projects. John Wiley & Sons.
• Aven, T. (2015). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1-13.
• Hillson, D. (2012). Extending the risk management process to manage opportunities. PM World Journal, 1(1), 1-7.