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Project Risk Management - Success At Your Business

Jun 16, 2008
Project risk management planning is essential for the success of any major business operation. Whether you're building a bridge or constructing a website, risk management is necessary to avoid failure. Even software can produce major adverse effects when it doesn't work properly. Current project management technology makes it easy to assess risks and plan intelligently.

Project risk management has to look at all events as the total of potential undesirable incidents, the likelihood of the incidents happening, and the potential outcomes. Any incident that has a high probability of occurring should not be thought of as risk if no negative consequences will result.

A dominant principle of project risk management is the belief that a risk that cannot produce a profit is not worth taking. This conviction stems from simple equation of weighing the risks against the benefits. You should analyze the gain of a project or business against the negative consequences of the risk that will be taken.

A situation similar to this is vaccination. A very small amount of people who get an injection have a bad reaction.. But if no one received the injections the disease would be much more common and more people would get sick and die. The result is that it is better for a few to get sick than to risk many people becoming ill.

The issues may not be that easy to decide in project risk management, however. If part of a project is incompletely or poorly described in scope or details, risks are difficult to evaluate. Many areas of risk are partially or entirely out of a manager's control, such as delayed or nonperforming external vendors; these outside factors can imperil an entire project.

Risk in the business world is the name of the game. Personnel issues are a risk. Lack of familiarity with processes and technology creates lots of risks because no one can predict what will happen. Failure to maintain adequate communication with a customer is a risk, but an avoidable one. Keep in mind that even if the project is going well on your end, if your customer doesn't hear anything, he's going to worry. Lack of documentation is also a big risk. If you don't write it down, you won't have a record to prove yourself in a critical situation.

Any ambitious choice, from a construction project to a complicated software design project will undoubtedly have an element of risk that can be associated with its undertaking. Making sure to use current and state of the art software which detects and mitigates these types of risks, and using the appropriate training will always help the project risk management specialist to judge the situation and properly weigh the risks involved.

Whether you're building a bridge or constructing a website, risk management is necessary to avoid failure. Current project management technology makes it easy to assess risks and plan intelligently. A dominant principle of project risk management is the belief that a risk that cannot produce a profit is not worth taking. There will be risks involved in any new venture. It doesn't matter if you're a project manager dealing with a huge construction project or if you are in it project management, there will be risks involved. Improper documentation practices also are risks as they make it impossible to demonstrate what you have done or are doing.
About the Author
George Purdy recently published new articles on project risk management. Look for info on project risk management. Or expand your knowledge on project management.
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