Risk Management in Project Management: A Comprehensive Guide

The assignment content discusses risk and project management, highlighting the importance of efficient risk management in ensuring the success of a project. It defines risk as an uncertain condition or event that can impact a project's objectives and goals. The inter-relationship between risk management and project management is also discussed, emphasizing the need for accountability and responsibility in managing risks to achieve project success. Additionally, the content highlights the differences between risk and uncertainty, and how effective risk culture can enhance project outcomes. Finally, it identifies various challenges faced during project implementation, including undefined goals, scope changes, lack of skills, poor communication, and stakeholder engagement.

Risk and project management
Project management
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Risk and project management
Risk in project management
The risk can be considered as the possibility of injury or loss. In terms of project management,
project risk can be defined as any uncertain condition or event which affects one or more
objectives and goals of the project. There is no-risk free project owing to the infinite number of
events that can take place and impact the project negatively. The two major components
associated with risks are the probability of the event and its impact on the project because of the
fact that the risk is proportional to the degree of extent of both these components (Kerzner, H.,
2013). The probability represents the likelihood of occurrence of the risk whereas the impact of
loss can be seen as materialization of the risk.
Inter-relation between risk management and project management
Risk management is a vital part of project management as it ensures the success of the project if
performed efficiently. It can be considered as an action plan that ensures the removal of the risk
and increases the success rate of the project. Risk management on integrating with the project
management helps in ensuring the successful completion of the project and provides a
competitive edge over other projects (Pritchard, C., 2013). Therefore, the sense of accountability
and responsibility is enhanced on its integration in the project. Finally, it helps in enhancing the
revenues of the company by saving on the additional expenses.
Difference between risk and uncertainty
Risk can be considered as the unplanned event which affects the objectives of the project. It can
either be positive or negative. Separate risk response strategies are used for the positive and
negative risk. The primary objective of the positive risk response strategy would be to maximize
the chances of positive risks and the objective of the negative risk response strategy would be to
minimize the negative risks and its impacts.
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Risk and project management
Whereas, uncertainty can be defined as the lack of complete certainty. In case of uncertainty, the
outcome of even is not known and cannot even be guessed or measured. But in case of
uncertainty, the background information is not given. (Raz, T., Shenhar, A.J. and Dvir, D.,
2002).
Risk culture and success of the project
The capability of taking strategic risk decisions and delivering the promises for the performance
are directly related to the risk culture of the organization. The organization having with efficient
risk culture do not allow the activities which are at odds with the stated procedures and policies
or operate outside their policies. The organization with effective risk culture means that the
organization will not ignore or condone such activities. Therefore all the strategic, operational
and tactical goals are achieved and lead to enhancement of the reputation and finances for the
company (Bozeman, B. and Kingsley, G., 1998).
Challenges while implementation of the project
The organization faces various challenges while implementation of the project plan. Some of the
challenges are undefined goals and scope changes in the project. Further the lack of adequate
skills for the project and lack of accountability which can make the project come to a halt.
Furthermore, the improper risk management and ambiguous contingency plans leading to
unexpected problems can also create issues. The project also suffers from communication
challenges like poor communication can lead to problems in the expectations. Furthermore, the
lack of engagement and interest of the stakeholders is seen to discourage the project members
and hamper the communication channel (Hallikas, J, 2004).
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Risk and project management
References
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Pritchard, C., 2013. The project management communications toolkit. Artech House.
Raz, T., Shenhar, A.J. and Dvir, D., 2002. Risk management, project success, and technological
uncertainty. R&D Management, 32(2), pp.101-109.
Bozeman, B. and Kingsley, G., 1998. Risk culture in public and private organizations. Public
Administration Review, pp.109-118.
Hallikas, J., Karvonen, I., Pulkkinen, U., Virolainen, V.M. and Tuominen, M., 2004. Risk
management processes in supplier networks. International Journal of Production
Economics, 90(1), pp.47-58.
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