Management of Risk
Risk management covers all the processes involved in identifying, assessing and judging risks, assigning ownership, taking actions to mitigate or anticipate them, and monitoring and reviewing progress. Risk is a major factor to be considered during the management of a project. Project management must control and contain risks if a project is to stand a chance of being successful.
Risk can be defined as uncertainty of outcome (whether positive opportunity or negative threat). Some amount of risk taking is inevitable if the project is to achieve its objectives. The task of risk management is to manage a project’s exposure to risk (that is, the probability of specific risks occurring and the potential impact if they did occur).
The management of risk is not a linear process; rather it is the balancing of a number of interwoven elements which interact with each other and which have to be in balance with each other.
Risk management at the project level focuses on keeping unwanted outcomes to an acceptable minimum. Decisions about risk management at this level form an important part of the Business Case.
Where suppliers and/or partners are involved, it is important to gain a shared view of the risks and how they will be managed.
The aim is to manage that exposure by taking action to keep exposure to an acceptable level in a cost-effective way. Risk management involves having:
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