What is Risk Management in Project Management?
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What is Risk?
In our daily life, we are often dealing with this term .. RISK. Sometimes knowingly and sometimes unknowingly we try to measure the RISK. Let’s take an example.
You have planned your travel. on the day, you will be boarding the train as per the schedule. When will you start from home? You have already calculated or rather estimated the time. Now when you have done the calculation, you may have considered booking the cab, carry all the required luggage, carrying the print out of your train ticket and so on. It means you have already have done the necessary plannings and acted accordingly.
Wish you have a happy journey.
Mow the question is what if
- the cab did not come on time
- the road has unexpected traffic than usual
- you realized, something you have missed to carry
- at the last moment some urgent things have come, which you cannot ignore
There can be many more things which can hamper your holiday.
Now if you are an experienced traveler, most of the things you are already aware of and taken the necessary precautions. Software industry also is not any different than life. to develop an website or to develop a product,we do need planning. We also need to be prepared from those happenings, that may restrict or create unintentional barrier to complete the project.
These are nothing but than Risks.
What is Risk?
PRINCE2 define risk as,
Risk is a set of events if occur will have an impact on project objective.
There are two important types of Risks:
First, let’s see what are negative risks. Negative risks are those which come to our mind first. You could not deliver the project within budget or could not deliver within schedule. In our previous example, you have missed the train and your complete holiday plan is now on a big question mark. In simple words, something has happened, that proved to be a loss, which you would like to avoid.
Similarly positive risk is also a risk but that will bring an opportunity for you, if you can deal with it properly.
In your project, you developed a website to sell products. But it became so popular that number of visitors increased than what you expected which may cause the system crash. This is a risk but you will like to occur as it will give you more revenue but you need to take suitable measures so that the system can support more users to your site. Hence this becomes an opportunity for you.
So what is required?
We need to do a proper risk management for our project. For that the important activities are
Identify the risk
Do the assessment
Control the risk
Hope you have got some idea about the Risk. We will discuss more about it and the risk management in the next few posts.
I would be happy to know your comments.