RISK MANAGEMENT

Risk Management

Risk Management

Introduction

Risk has been referred to the uncertainty that might occur anytime. The probability of any events if arises would either have positive or negative effect on the project. When a person plans any project, there are possibilities of unforeseen risk. Project risk management is concern with the confidence of significant during the worse situation and the cost associated to it. A procedure that measure and evaluate risks and hence, formulating effective strategies in order to manage these risks that may affect the profitability of the business. Such strategies include risk transfer to the other and avoid risk, minimize its negative effects and to accept some or all of their consequences (Mundine, 2011).

Before starting a project, it is important to understand risk management and how its components which fit into the process of project management. The elements of risk management are part of the process groups Project management. Planning for risk management, risk identification, qualitative risk analysis, quantitative analysis of risk, planning risk response and risk monitoring are part of the planning process group. Risk control is part of process control.

Discussion

Risk Management is applied in the overall planning of the project. In this paper, we will see how the managers use different strategies in order to manage the risk, avoid the risk and minimize the risk. As we know the focus of the traditional risk management was on the risk that originates due to the legal or physical events that comprise of fire, natural disasters lawsuit or death. Then again, the focus of the financial risk management is on those risks that can be handled to utilize the financial barter tools. Regardless of the type of risk management, all major companies, as well as groups and small businesses has a team dedicated to risk management.

Determining Risk

While determining the risk, there are three key features that should be taken into consideration.

The consequence inducing the risk.

The probability of the consequence encountering.

The effect on the plan if consequence arises.

Consequences of the Risk

When planning a project it is not possible to determine the each and every risk that is associated with the project. There are varieties of risks that can occur on the project and a manger cannot anticipate all of them. What a manager needs to do is that, he should select the events that have an ultimate impact on the project.

Risk Probability

Though we are able to indicate the risks, but we do not possess the accurate statistic regarding their occurrences. It is unbelievable that we can verify their accurate probability. The subjective scale of different measurement is used in order to determine the probability. The focus is on those consequences that a manager expected that will occur.

Risk Affect

In order to see the risk effect on the project that is to see the impact on t he scope, time, resources and quality characteristics of the project plan. However, these things vary from project to project, but the similar three point scale of high, medium and low is used for anticipating the ...