Risk is the chance, great or small, that damage or an adverse outcome will occur from a particular hazard.
There are some essential elements that need to be in place in a project if risk management is to be effective and innovation encouraged, i.e. that:
- The Project Board supports and promotes risk management, understands and accepts the time and resource implications of any countermeasures
- Risk management policies and the benefits of effective risk management are clearly communicated to all staff
- A consistent approach to risk management is fully embedded in the project management processes
- Management of risks is an essential contribution to the achievement of business objectives
- Risks through working with programmes and other projects are assessed and managed
- There is a clear structure to the risk process so that each element or level of risk identification fits into an overall structure
- Where the project is part of a programme, changes in the state of any project risks that are also identified as programme risks must be flagged to programme management or the designated risk management function in the programme.
Projects bring about change and change incurs risk.
Change is usually about moving forward and this often means the use of new methods or new technology.
These aspects can increase the risks. It is the combination of likelihood and impact, including perceived importance.