Project Management can be recognized as the process of planning, organizing, securing, and managing your business resources to achieve desired objectives.
Before we try to comprehend what risk based project management is, let us examine project
management itself. Project management is the process by which the outcome of the project
under consideration will be managed so that uncertainty can be controlled.
With this description, we can see that risk management is the key step underlying the
project management process. So risk based project management is essentially learning how to
manage the risk (or uncertainty) inherent to any project undertaken. When uncertainty is
reduced, or even completely eliminated, then the value of the project is protected and
expected outcomes become realized.
What are the steps in Risk Based Project Management?
1. Being aware of risk. – in this step, the project management planners will prioritize
risks so that threats which will probably occur first and pose the greatest potential loss
to the project can be tackled first.
2. Risk assessment. – here, the project managers have to strike a balance between a risk
which poses higher potential loss yet has lower probability of occurring, and a risk which
poses less potential loss but has a higher probability of occurring.
3. Creating strategies to control risk. – Common strategies employed are dodging the risk
altogether, permitting certain or even all outcomes of the risk to be absorbed, lessening
the potential negative impact, and allowing another party to shoulder the risk.
4. Reducing risk by applying managerial resources.
Where does risk come from?
A project can be threatened by various forms of risk that come from:
– the political system
– internal and external organizations
– environmental factors
Types of risk management
1. Management of risks due to legal or physical factors – this is inclusive of lawsuits
and natural disasters, among others.)
2. Financial risk management – this involves risk management employing traded financial