This report discusses the importance of investing more in project risk management. It explains how project risk management helps in early identification of risks, communication about risks, consideration of opportunities, prioritization of risks, and assessment of risks. The report also provides examples to support the argument.
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Running head: RISK MANAGEMENT Risk Management Name of the Student Name of the University Author’s Note:
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2 RISK MANAGEMENT Table of Contents Introduction................................................................................................................................3 Discussion..................................................................................................................................3 Project Risk Management......................................................................................................3 Investing more in Project Risk Management.........................................................................3 Conclusion..................................................................................................................................6 References..................................................................................................................................7
3 RISK MANAGEMENT Introduction Riskmanagementisreferredtoasbetteridentification,evaluationaswellas prioritization of threats for minimization, monitoring as well as controlling the entire impact of unfortunate events (Hopkinson 2017). The two kinds of events that can occur within a project, which are negative and positive events. The positive events are referred to as opportunities and negative events are referred to as risks. The following report outlines a briefdiscussiononthefactorthatinvestmentshouldbedonemoreonprojectrisk management with suitable examples. Discussion Project Risk Management Project risk management is one of the major aspects of project management. This project risk is an uncertain condition or event after having a positive or negative on the objectives of a project (Marcelino-Sádabaet al. 2014). Project risk management is mainly dependent on the supporting of organizational factors after having clearer responsibilities and roles as well as technical analysis. It not only recognizes the threat, but also examines core opportunities within a project (Larson and Gray 2017). One of the most significant approach in this project risk management includes performing qualitative risk analysis, which ensures that every risk is analysed with highest priority. Monitoring and controlling of risks is also done in this particular approach and hence ensuring that the project is extremely safe. Investing more in Project Risk Management The strengths, weaknesses, opportunities and threats of the project are easily tracked with the help of an effective risk management strategy (Bowers and Khorakian 2014). Moreover, unexpected events are also planned so that it becomes much easier to understand the gaps and challenges. Successful project manager can identify the important factors for
4 RISK MANAGEMENT risk management as achievement of project goals and objectives is dependent on planning, preparation, outcomes as well as evaluation, which contribute to fulfilment of strategic goals. It is required to invest more on project risk management as it provides several advantages, which are as follows: i)EarlyIdentificationofRisks:Thisisthefirstadvantageofprojectrisk management. Every risk in a project can be easily identified and in the early phases of that project. Every missed opportunity is easily analysed for better and earlier identification of risks.It is one of the major requirements for making a project successful by removal of complexity. These risks have influence on decisions for how to manage or invest money in projects or any other property. This type of issue can be easily eradicated with project risk management. Thus, the project manager should invest more in this particular sector. In Australian Real Estate Market, due to high investment on project risk management, they were able to remove risks effectively (Intechopen.com. 2019). ii)Communication about Risks: Project risk management is also effective as it helps in communication about the risks (Crawford 2014). Thus, decisions are accurate regarding risks and threats. Major attention is to be paid to risk communication and solicitation of input at the team meetings is required for ensuring that this risk management is being perceived as extremely vital and significant for the project work.As soon as risks would be communicated effectively, the project manager clear idea about risks and how team members are reacting to management of such risks. iii)Consideration of Opportunities: This type of risk management is also helpful as it evenconsidersopportunitiesorpositiverisks,whichmightbeadvantageoustoboth organization and project (Harrison and Lock 2017). Chances are present that the team can identify several opportunities with a high pay off, which might not need better investments in
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5 RISK MANAGEMENT respect to resources and time. It helps in making project faster and more profitableand hence project manager should invest more in project risk management. . iv)PrioritizationofRisks:Anotherdistinctiveadvantageofthisprojectrisk management is risk prioritization. Since, few risks have high impact and probability than others, spending of time on the risks, which could cause major loss and gain in the project. An evaluationinstrumentisused for categorizingandprioritizingrisks.It would be extremely effective for the entire project since they can track every issue faced in the project and analyse which issue to be eradicated on top priority. For example, one of the most popular construction projects is Hudson Yards. One of the part of this project in above rail track. When the project was proposed, this particular risk was kept on top priority that the building might not survive due to huge shaking caused by trains (HYDC.org. 2019). However, since project manager has invested more on project risk management, it was easier for him to analyse the case and provide solution. He not only identified the issue earlier but also gave solution of building a platform on the rail track before constructing the building. Hence, he was able to eradicate issue in his project efficiently as investments were huge on this project risk management. v)Assessment of Risks: The risks are assessed on a priority basis and thus problem solving is completed for determining how to manage the risks in a better manner (Kerzner andKerzner2017).Riskassessmentisrequiredforknowingaboutprocessofrisk management and this is possible is risk management process is given high priority. The project manager should invest more on project risk management for ensuring that the risks are eradicated on time.One of the most popular successful projects is merger of American Airlines with US Airways. It created an overlap in programs and technology and the spreadsheets were inadequate to manage the complex projects (Harris 2017). The entire life cycle of a project was affected by the risk and hence restricting the project to remain on track
6 RISK MANAGEMENT and also fulfil the project goals and objectives. There were few strategies of risk management that ensure that risks are mitigated on time. Since they have invested more on project risk management, they were able to eradicate the project issues effectively. Conclusion Therefore, conclusion can be drawn that a risk is an event, which can potentially impact the budget, performance and timeline of a project. Thus risk management is referred to as the procedure to identify, categorize, prioritize and plan risks before they could become issues for the project. The above provided report has clearly outlined the importance of project risk management and reasons behind investing on this type of management.
7 RISK MANAGEMENT References Bowers,J.andKhorakian,A.,2014.Integratingriskmanagementintheinnovation project.European Journal of innovation management,17(1), pp.25-40. Crawford, J.K., 2014.Project management maturity model. Auerbach Publications. Harris, E., 2017.Strategic project risk appraisal and management. Routledge. Harrison, F. and Lock, D., 2017.Advanced project management: a structured approach. Routledge. Hopkinson, M., 2017.The project risk maturity model: Measuring and improving risk management capability. Routledge. HYDC.org. 2019. [online] Accessed fromhttp://www.hydc.org/[Accessed on 26 Apr. 2019]. Intechopen.com.2019.[online]Accessedfromhttps://www.intechopen.com/books/risk- management-current-issues-and-challenges/importance-of-risk-analysis-and-management- the-case-of-australian-real-estate-market[Accessed on 26 Apr. 2019]. Kerzner, H. and Kerzner, H.R., 2017.Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons. Larson, E.W. and Gray, C.F., 2017.Project management: The managerial process. McGraw- Hill Education. Marcelino-Sádaba, S., Pérez-Ezcurdia, A., Lazcano, A.M.E. and Villanueva, P., 2014. Project riskmanagementmethodologyforsmallfirms.Internationaljournalofproject management,32(2), pp.327-340.