Risk Management in Projects

This assignment discusses the importance of risk management in project management and provides strategies to effectively manage risks within a project. It also covers techniques for measuring and ranking risks, as well as ways to minimize project risks. The assignment includes a critical analysis of the concept of risk and provides insights into risk measurement and risk ranking techniques.

Running head: RISK MANAGEMENT
RISK MANAGEMENT
Name of Student
Name of University
Author’s Note

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Executive summary
Risk management is the most important step that must be taken by an organization while
undergoing a project. It saves the consumption of time, effort as well as money. The
unwanted stress on project team is reduced as well. The risk management helps in preventing
numerous problems along with making several other problems less likely. Activities of risk
management are an important task of a project manager. Risk management deals with
anticipating the risks as well as plan them in such a way that would help a project manager to
resolve it whenever it takes place. Risk management saves the consumption of time, effort as
well as money. With the help of risk management, a project transforms from being in control
of project manager to being in the control of project. Risk management includes various steps
that are required to be followed, they include planning regarding risk management, risk
identification, qualitative as well as quantitative analysis of the risks, planning of risk
response and controlling and monitoring the risk responses. This assignment discusses
regarding the ways using which risk management can be done for a specific project, it also
discusses regarding the ways by which risk can be measured as well as ranked, and these
rankings can be utilized for figuring out mitigation strategies.

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Table of Contents
Introduction................................................................................................................................3
Critical analysis of the concept of risk...................................................................................3
Risk Measurement and Risk Ranking Techniques.................................................................5
Strategy for managing risks within a project.........................................................................8
Ways to minimize project risk.............................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13

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Introduction
Risk is simply identified as a possibility of loss. It is a probability of a situation within
a project or an adverse event that occurs unexpectedly and creates an impact on the entire
project. Risk is not the entire problem itself but it's just the precursor to a bigger threat. Risk
is the possibility of creating loss within a project that is manifested with financial loss, delay
in payment and also lag in performances (Bromiley et al. 2015). At any given point in the
project lifecycle a projected goal can never be achieved when a probability of a risk is
available within the resources that would make for the impact within the entire project. This
is the reason why the critical analysis on the entire concept of risk occurring within a project
needs to be evaluated to make sure that the concept of risk occurring within a project is made
clear. The report following the analysis would further include the techniques by which risk
can be measured and rank accordingly to make sure which risk should be taken decision
against to eliminate first. This process used also implies which race has the maximum impact
on a project and which has the least. Furthermore the strategy for managing and risk within a
project would also be employed with this critical analysis report to make sure that the
strategy for managing risk within a project clearly sets out the ways by which project risks
can be minimised are eliminated from the entire project system.
Critical analysis of the concept of risk
Risk can be defined as the possibility of any sort of loss when it comes to the context
of project management. The risks within the project can be identified to be from various
aspects of the management process in the entire project (Hopkin 2018). The risk of the
possibility of loss can occur from any aspect uncertain of the event or condition that is
occurring within the progression of a project objective. Risk creates an impact on at least one
project objective. the first and foremost mindset that a person needs to set up before starting

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off with a project management procedure is that there are no possibility of completing the
entire project without going through any kind of risk (Lock 2017). Therefore a person
involved with in a project should be aware of the occurrence of risk and this concept needs to
be sorted out much before the project management procedures begin. When a project is
initiated in its first stage and it is tried to anticipate all the outcomes of the decision taken
throughout the project, it is also necessary that the risks that could occur within a project is
identified at first or the entire project can come down easily if any of the risk is unidentified
creating a major threat to the culmination of the project (Gotlib 2015).
There are different opinions about various authors against the concept of risk within a
project management procedure. While some of the authors of the opinion that risk
management is probably dealt with the utilisation of uncertainty within the events in project,
summer of the opinion that vista probably the negative project events that can be identified
right at the point of initiation when any event has a high likelihood of affecting a project in a
negative way what has the potential to eventually cause threat to the project. Analysing both
the perspectives critically, it can be pointed out that the uncertainty of events that can affect a
project in a negative way can mostly be identified with the safety risks that are equally
common in construction projects (Reason 2016). It is uncertain and at the same time it is pre
determined that the events occurring in construction projects are risky right at the point of
initiation. In case of software development projects, there are various aspects within a project
that might develop an uncertain event or an uncertain condition which would further produce
an impact on the entire project regarding the security systems. It is anticipated that any kind
of software development project would have a security issue with the project regarding the
development of the software and how it manages the information generated or propagated
within, but the entire capability on impact of the project is not known. The uncertainty of
project risk is what makes the management procedure even more complex (Hammer 2015).

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Risk Measurement and Risk Ranking Techniques
There are effective ways by which risk can be evaluated, and it is done only to make
sure that risks are measured and ranked accordingly to prioritise them. Prioritizing risks
makes it easier to make decisions against mitigating that risk which is essential as a project
manager (Farrell and Gallagher 2015). A project manager is bound to have specific skills in
effectively managing a risk when it arises since the inability to manage those risks on hazards
further in the project would mean that the entire process would come to a crumble. Therefore
throughout the entire life cycle of the project there are searching techniques followed to
measure the risks and rank them accordingly to make sure that they are set on the basis of
their priority. Following would be few of the risk measurement and risk ranking techniques
that a project manager can utilise to make sure that the risks are identified and prioritised well
(Sadgrove 2016).
Risk Measurement Techniques: The first and foremost process or technique by
which this can be measured is the various risk assessment techniques that follows through the
process of identification of a risk. This initial process helps in uncovering or recognising the
risks that are yet not been detected due to that outcome as it has yet not affected the project.
However a project manager should also keep on asking through the entire project to him or
herself about what is the reason that the anticipated project goals and objectives are not
finding a possible outcome (Davis et al. 2016). There are various techniques that different
organisations utilised for identifying a process that would establish risk management
strategies. few of them are brainstorming, interviewing and self assessing, serving the risks,
identification of the lost data and event inventories facilitating numerous workshops, finding
out the root cause and maintaining a checklist analysis, SWOT analysis maintaining influence
diagrams taking and help from an expert through that judgements on the progression of the
project and analysis of the assumptions. There are various research is conducted on making a

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proper framework for identifying the risks. These are also a lot in number that various
organisations uses in effectively identifying the risk so that each identifying risk can be
discussed and stated within a complete statement according to the cause of the risk, the effect
of the risk the impact it has on the project. It is also necessary to categorise and group the
duplicate risk. Duplicate risks have a tendency to occur as there are certain risks which
cannot be removed completely from a project (Brindley 2017). It might reoccur in some
another context and therefore a project manager needs to take a point decision in managing or
mitigating these kind of a square if these risks rise again they would not impact in the same
way like they could have been threatening enough for the project.
Risk Ranking Techniques: After risk assessment or risk measurement is completed,
it is important to prioritise the risk to evaluate the risk level. Risk level is determined so that
each risk can be decided on for taking an appropriate mitigation process or action that would
help in eliminating with the risk from the project system or minimising the impact (Hällgren,
Rouleau and De Rond 2018). The entire process of decision making Indians risk is facilitated
by the risk prioritisation levels which are to be a great by all the people present in the project
team. Risk levels are to be defined before prioritising the risks. The risk levels can be defined
as follows:
 Tolerable risk which is the condition where risks should be identified with no
or little effect as the consequence on the project objectives. Tolerable risks are
very low in frequency to orchid that has little or no concern in impacting the
entire outcome of the project.
 Low risk is another condition where the identified risk is only mine and effect
on the Project objective and the probability of the occurrence of these kind of
risk are only susceptible to minor concern.

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 Medium risk is risk identification condition which effects of Project objective
or its timing schedule or the project costs. It is a high level for currents and
controls all the contributing factors.
 High risk is a condition where all the risks are identified to be of a high
priority ration of occurrence and impact to the project objectives, schedule and
cost.
 Intolerable risk is a condition which has total impact on the cost schedule for
performance of a project and it requires higher level of establishment for
decision taken against mitigating the risk with acceptable fallback position.
After the identification of the risks and prioritising them, a project manager should
take decisions against them based on the risk matrix created as per the analysis of risks.
Following is a sample by which risk assessment matrix should be created:
Figure 1: Sample of Risk Assessment Matrix
(Source: Harrison and Lock 2017)

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Strategy for managing risks within a project
 Identification of risks and preparing a risk register: before mitigating or managing
risks it is important to gain knowledge regarding them and identify them properly.
During identification, in case a specific risk is missed out, it would further create a
risk for the project. The risks must be divided into categories first such as business
objective risks, people risks, business risks, system risks, budget risks and many more
(Uhl and Gollenia 2016). These risks can then be categorized into detailed categories
which helps in proper identification. One more way by which risks can be categorized
is by dividing them in aspects of external or internal risks. The PEST method can also
be utilized for doing so.
 Evaluating and analysing risks: once the risks are identified, the proceeding step is
to evaluate and analyse all the risks, this helps in determining their effects on the
success of the project. The risks must be evaluated and analysed on the basis of two
criteria, they include level of impact and likelihood. Usually project managers rate the
risks on the risk register based on their impacts as well as likelihood (Hulett 2016).
This can be done by creating a matrix in order to chart out the evaluations or gaining
wholesome idea regarding the risks and their impacts on project. The rating of risks
can be used for prioritizing the various types of risks and help the project manager.
 Identification of risk triggers: the team can be divided into smaller sub teams which
would help in taking care of every risk and they would occur as the project manage
predicts them to present. The groups would individually study their risks in a deep
sense along with recognizing ten triggers for the risks as well as signs of the warnings,
these warnings wold tell the project team regarding the danger to their project
(Borrajo and Corchado 2018). During this stage the project manager would be able to

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determine the actual roles as well as responsibilities that every team and team
members take when they face a scenario.
 Brainstorming for the solution ideas: every team must consider their own risks and
brainstorm into various ideas which would help in mitigating the threats. These
preventive measures must be used before starting a specific project. It would help the
team to eliminate or decrease the effects of various risks that have possibilities of
occurring after the completion of project (Lasserre 2017). The team must think of
tapping various opportunities that are provided to them as stated in the project plan of
the project life cycle. Opportunities are usually considered as various positive risks in
a specific project and in most of the cases, these positive risks might result in
decreasing the impact of negative risk.
 Preparing a plan: once the risks have been identified, it easy to measure the possible
solutions that are necessary to undertake. It is known as action plan, this particular
action plan is considered as a fundamental unit of the risk management plan of the
project. For the case of a project manager, he owns the plan and it is necessary for the
project manager to list down the mitigation strategy for every risk throughout the
project (Meyer and Reniers 2016). These plans help a team to keep risks at bay. The
mitigation strategies would help a project in reducing the impacts created by risks.
 Monitoring as well as reviewing risks: during the processing of a project according
to the project plan, side by side runs the plan of project management, it takes care of
all the risks that a project might face during its completion (Fiksel 2015). The
proceeds of project risk management plan is usually documented in the risk register, it
is very important to review the document from time to time.

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Ways to minimize project risk
Projects usually start in proper direction but might get off track sometimes. The risks
might occur due to any reason weather expected or unexpected. There are various rules that
help in managing project risk in an effective way, these rules are mentioned below
 Identification of risks early in the project: the project manager should first review a
list of risks sources that have the chances to create problems in the implementation of
project, he must also consider the knowledge and experiences of the entire team. All
the potential; risks must be brainstormed (Misra, Rana and Verma 2017). All the
missed opportunities must be brainstormed as well in case the project has not
completed. It must be clear that who is responsible for every risk.
 Communication regarding risks: solicit input at various team meetings and risk
communication must be paid proper attention in order to ensure that the team must
understand the fact that risk management is actually a very important part of the
project. Various efforts for communication with principal or project sponsor must be
carried out regarding serious and big risks, this would make sure that the customer or
boss would not be surprised when the risk takes place (Morden 2016). This must be
ensured that the sponsors take effective decisions on top risks because they might
exceed the project manager’s mandate.
 Consideration of threats and opportunities while assigning risks: usually risks
harm the projects but in some cases it might also provide numerous positive risks or
opportunities which might provide benefits to the project as well as the organization.
The opportunities must be dealt with proper concentration (Grote 2016). There are
chances that the team would identify the opportunities with a maximum pay-off which
might not require a huge investment in the aspects of resources or time. This would
make the execution of project fast, better as well as profitable.

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 Prioritization of risks: few risks have high impacts as well as profitability as
compared to others. Hence risks that have the chance of creating more loss must be
provided with most attention. This can be done by creating an instrument that would
help in evaluation, prioritizing and categorization of risks.
 Understanding the reason and impacts of risks: risks occur at various levels. In
case the risk at an individual level needs to be understood, the causes must be noted
down (Bessis 2015). The data that would be gathered through a risk analysis would
provide insights that would be valuable in nature and it would also provide necessary
inputs that would help in finding effective responses for optimizing the risks.
 Developing responses to the risks: preparing a risk response plan provides
additional value to the project because it prevents any threat from occurring or it
minimizes its negative impacts (Glendon and Clarke 2015). In order to carry out the
assessment of every risk the project would need to identify what can be done to
minimize the likelihood of the identified risk, what can be done for managing every
risk and if the risk must occur and what can be done for ensuring that the
opportunities that have been provided are not missed.
 Developing preventive measures for every risk: a project must look for ways for
reducing likelihood of a risk or prevent a risk from occurring (Haimes 2015). For
doing this, conversion to tasks must be done, the ideas that were identified would be
helpful in eliminating or reducing risk likelihood.
 Developing contingency plan for every risk: a contingency plan must be ready for
every risk so that whenever the risk occurs, instant action can be taken and mitigation
strategy can be utilized.

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Conclusion
In conclusion, it can be stated that the risk management procedure is unavoidable in
case of any kind of project that a project manager commences with, irrespective of its size or
the field that it deals with. Risks should be identified a right at the initial stages so that with
effective procedures of identifying, measuring and ranking or prioritising the risks, effective
decision is taken against mitigating or eliminating the risk from the entire project. Risk is just
a precursor to a bigger threat, that has the ability to paralyze an entire project even causing
maximum impact by making sure that the project has a steady loss in performances, finance
and business process. The risk management procedures are does enforced by every
organisation applying or planning about any project to have total control over the risks
occurring within the project. Errors can occur from anywhere within the project system and
therefore entire concentration should remain with identifying risks right at the initial stages
when the project is still not out to go live, or has not yet been began with. A project manager
usually concentrates on execution of the project along with the risk management of the
project, both need to be functioned side by side, this would help the project in functioning
effectively and mitigate any risk without consuming much time and resource. This
assignment includes a critical analysis on the basic concept of risk, it further discusses about
the ways that can be used in measuring as well as ranking risks. It also outlines the processes
using which risk management strategies could be constructed. It also mentions various ways
that can be practiced which would help in assisting in decreasing the risk.

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References
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Borrajo, M.L. and Corchado, J.M., 2018, August. An Agent-Based Virtual Organization for
Risk Control in Large Enterprises. In International Conference on Knowledge Management
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Brindley, C., 2017. Supply chain risk. Routledge.
Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk
management: Review, critique, and research directions. Long range planning, 48(4), pp.265-
276.
Davis, T., Cutt, M., Flynn, N. and Mowl, P., 2016. Talent assessment: A new strategy for
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Farrell, M. and Gallagher, R., 2015. The valuation implications of enterprise risk
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Haimes, Y.Y., 2015. Risk modeling, assessment, and management. John Wiley & Sons.
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