Risk management is an essential tool for any project manager or PMO in a company. Its purpose is to identify ahead of time potential failures and vulnerabilities that may hinder the project in terms of costs, content and schedules, possibly causing it to halt or even fail.
When conducting proper risk management, a project manager or PMO can identify the weak spots and take preventive or corrective actions at various stages of the project, depending on its scope, type and nature.
Risk Management – The Project’s Security
Every project involves risks and every project failure is a result of insufficient precaution against potential risks or lack of preparation altogether. Risk is defined as the possibility that the project will suffer from some kind of damage, such as deviations from schedules, content and costs, and more.
Project failures can occur due to a lack of clear goals, miscalculated workloads and volumes, the absence of an implementation expert, the use of unfamiliar technology, insufficient or unskilled personnel, inability to implement the system, rigidity, etc.
Risk management is a technique for identifying risks that endanger the project; evaluating and analyzing them; presenting them to the customer and the senior management; and taking various actions in order to reduce, prevent and remove the risks.
Proper and professional risk management can significantly increase the success rate of the project.
Risk Management Glossary
Here is a glossary of terms that describe the risk management process in projects from start to finish.
Risk – Potential failure or vulnerability that may cause damage to the project in terms of content, schedule and delivery of the product or service.
Risk Level – The measure of the severity and probability a risk.
Problem – A difficulty identified by the project management team.
Risk Management – A technique for identifying potential risks in a project, including monitoring and supervising them in order to prevent their fruition. In this process we first identify the risk, then monitor it and act to reduce its severity and probability until it is resolved.
Risk Analysis – A necessary activity for defining risk factors and their implications, as well as the understanding required to prevent them.
Risk Significance – Understanding the implications of a risk if ever realized.
Risk Factors – The real problems of a project that could pose real risks.
Handling Risk – Preparing an action plan for coping with risks and finding suitable solutions.
Domino Effect – The realization of a risk that could lead to additional risks in the project.
Bottleneck Effect – A significant risk that until resolved will stall the entire project.