What is risk management in project management? | Chapter 11

The Project Risk Management knowledge area includes the processes that identify, evaluate, respond to, and monitor project risks.

By their very nature of creating a unique product, service, or result and operating within constraints and under assumptions, projects cannot exist without risks.

There are risk factors in every project objective, deliverable, and activity that exist starting with the earliest inception phase all the way until closure.

Though we often think of risks as being threats with negative consequences, there are also positive risks, called opportunities, that can increase the project's chances of success or which can be exploited to save time or money.

Project risk management can be thought of as a balancing act because innovation, which is so necessary for successful projects, doesn't occur without elements of risk.

So the objective of project risk management is not to avoid risks entirely, but to increase the probability and impact of positive events, and decrease the probability and impact of events adverse to the project.

Without risk-taking, new methods of efficiency, originality, and competitiveness can't be achieved, so the project risk processes make sure the costs of risks are weighed against the benefits they provide.

The project manager has the key role in project risk management even if there are professional risk personnel also assigned to the project, and a proactive approach is necessary because a risk is the only root cause of project failure.

Behind any unsuccessful project, an objective is an opportunity that wasn't capitalized upon or a risk caused by a false assumption, restrictive constraint, or an event that wasn't sufficiently planned for.

Project Risk Management Processes

The Project Risk Management knowledge area includes the processes that identify, evaluate, respond to, and monitor project risks:

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