Project risk management

Project risk management is an important aspect of project management. According to the Project Management Institute's PMBOK, Risk management is one of the ten knowledge areas in which a project manager must be competent. Project risk is defined by PMI as, "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives."

Project risk management remains a relatively undeveloped discipline, distinct from the risk management used by Operational, Financial and Underwriters' risk management. This gulf is due to several factors: Risk Aversion, especially public understanding and risk in social activities, confusion in the application of risk management to projects, and the additional sophistication of probability mechanics above those of accounting, finance and engineering.

With the above disciplines of Operational, Financial and Underwriting risk management, the concepts of risk, risk management and individual risks are nearly interchangeable; being either personnel or monetary impacts respectively. Impacts in project risk management are more diverse, overlapping monetary, schedule, capability, quality and engineering disciplines. For this reason, in project risk management, it is necessary to specify the differences (paraphrased from the "Department of Defense Risk, Issue, and Opportunity Management Guide for Defense Acquisition Programs"):

An improvement on the PMBOK definition of risk management is to add a future date to the definition of a risk. Mathematically, this is expressed as a probability multiplied by an impact, with the inclusion of a future impact date and critical dates. This addition of future dates allows predictive approaches.

Good Project Risk Management depends on supporting organizational factors, having clear roles and responsibilities, and technical analysis.

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