Analysis of Project Risk Management Strategies 2022

Running head: ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES
ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES
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ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES1
Table of Contents
Concept of risk:..........................................................................................................................2
Risk measurement technique:....................................................................................................3
Likelihood of risk:..................................................................................................................3
Analysis of risk impact:.........................................................................................................3
Monetary values:....................................................................................................................5
Project risk management strategy:.............................................................................................5
Risk identification:.................................................................................................................5
Risk response:........................................................................................................................9
Application in construction project:.........................................................................................13
Risk identification:...............................................................................................................13
Risk measurement:...............................................................................................................14
Risk response:......................................................................................................................15
References:...............................................................................................................................18

ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES2
Project Risk and Procurement Management:
Concept of risk:
Risk is simple terms refers to the events or actions that are not wanted or not certain, but
affects the execution of project and the project might not achieve its objectives or goals.
Therefore, it is important to identify risk in the project (Kliem and Ludin 2019). However,
only identification of project risk is not enough, it requires to be properly evaluated and
controlled as well. It is justified because even if risks in the projects are identified, if there is
no framework for risk evaluation and risk control, then it is not possible to mitigate project
risks and ensure success in the project.
The concept of risk is described through the following example:
If in a software project, the objective of the project is to design an enterprise software for a
company, then it is not enough to ensure that the project is delivered within the approved
time and budget, ensuring security of the enterprise data that the enterprise software collects
is also an important objective of the project. Therefore, if those data are illegally accessed,
then it will compromise the security of the data and it affects the success of the project as the
project objective was not ensured (Carvalho and Rabechini Junior 2015). It is important to
note that risk does not only refers to actions or events that affect the project execution, it also
refers to actions or events that might affect the quality of the project after the project is
completed as well.
Now, even if the project team identifies this risk, it is of no importance if there is no strategy
for evaluating this risk. Evaluation of the risk means how those data might be accessed and
this will help in designing an effective strategy that mitigate this risk.
Therefore, risk identification, risk evaluation and risk mitigation are three important aspects
of risk management.

ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES3
Risk measurement technique:
In order to ensure proper risk management in a project it is important to measure identified
risks. Risk measurement is an important aspect of risk assessment. However to measure risks
in the project, it is essential to apply proper tools and techniques to ensure that the risk
measurement is effective and efficient as well. There are some preferred tools in project
management for measuring risks in the project.
Likelihood of risk:
Likelihood of a risk refers to the probability of occurrence of a specific risk in the project.
Sometime, a risk might have a high impact, but it might have low probability. Such risks are
important for the project, but risks that have higher probability of occurrence in the project, is
also important for the projects (Cagliano, Grimaldi and Rafele 2015). Such risks might have
lower impact on the project, if compared with risks of significant impact, but without
mitigating those risks it is not possible to ensure proper execution of the project.
Therefore, considering likelihood of the risks along with impact of the project is required for
measuring risks of the project.
In the following example, a typical likelihood and impact analysis is provided for a
construction project:
Analysis of risk impact:
This is one of the most preferred and effective tools for measuring project risks. This
technique identifies the impact of the risk on the project execution and how it might
compromise the success of the project (Muriana and Vizzini 2017). Here the preferred
technique is to analyse cost of the risk. Along with this, identification of things that might be
compromised due to the risk and how the risk might compromise the brand value of the
organization executing the project are recommended while measuring the impact of the risks.

ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES4
However, only identification of impact of risk is not efficient, a detailed overview of the
likelihood of the risk is also required. This is described in details in this context.
Impact of risk is calculated with the following formula:
Impact = likelihood of risk * consequence of risk
These concepts are described through an example in this context with reference to a
construction project:
Risks Probability Consequences Impact
Employee lacks technical
knowledge required for the
project
High Extreme Very high
Quality issues in the items
procured
Medium Extreme Very high
Competition in the market
affects business process
High High High
Project is delayed Medium Extreme Very high
project budget is not proper Low High High
Lack of regulatory
compliance
Very low High High
Return on investment is not
proper
Low High Medium

ANALYSIS OF PROJECT RISK MANAGEMENT STRATEGIES5
Safety assessment is not
proper
Medium High High
Assessment of environment
impact is not proper
Medium High High
Monetary values:
Measurement of risk in terms of monetary values is required because idea of cost for
implementing risk mitigation technique for that particular risk is an important consideration,
otherwise the organization might invest in the mitigation of the risk such an amount that
exceeds the cost of the risk itself to the business (Willumsen et al. 2019).
The strategy is to minimize the impact of the risk, not to increase the cost of the project for
implementing risk mitigation.
Project risk management strategy:
Project risk management refers to design of strategies for managing risks in the project
effectively and efficiently. It consists of risk identification, risk measurement, risk
prioritization, risk response strategy (Rostami 2016). In order to ensure proper risk
management in a project it is important to measure identified risks. Risk measurement is an
important aspect of risk assessment. However to measure risks in the project, it is essential to
apply proper tools and techniques to ensure that the risk measurement is effective and
efficient as well. There are some preferred tools in project management for measuring risks
in the project.
Risk identification:
Risk identification is the process of identifying possible risks in the project. In order to ensure
that project risk management is proper, it is important to properly identify the risks in the