The level of risk that an organization is willing to accept while pursuing its objectives, and before any action is determined to be necessary in order to reduce the risk.

Includes the processes of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring risk on a project. The objectives of project risk management are to increase the probability and/or impact of positive risks and to decrease the probability and/or impact of negative risks, in order to optimize the chances of project success.

Types of Risk

POSITIVE RISKS:

Types of Risk

NEGATIVE RISKS:

The process of defining how to conduct risk management activities for a project.

The process of identifying individual project risks as well as sources of overall project risk, and documenting their characteristics.

The process of prioritizing individual project risks for further analysis or action by assessing their probability of occurrence and impact as well as other characteristics

- The process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives.

The process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks.

The process of implementing agreed-upon risk response plans

- The process of monitoring the implementation of agreed upon risk response plans, tracking identified risks, identifying and analyzing new risks, and evaluating risk process effectiveness throughout the project.

KEY CONCEPTS

Levels:

An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.

Levels:

The effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks, representing the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

“Risks will continue to emerge during the lifetime of the project, so Project Risk Management processes should be conducted iteratively”

In order to manage risk effectively on a particular project, the project team needs to know what level of risk exposure is acceptable in pursuit of the project objectives

TRENDS AND EMERGING PRACTICES

Most projects focus only on risks that are uncertain future events that may or may not occur.

Uncertainty exists about some key characteristics of a planned event or activity or decision.

Uncertainty exists about what might happen in the future.

PROJECT RESILIENCE

Projects exist in an organizational context, and they may form part of a program or portfolio. Risk exists at each of these levels, and risks should be owned and managed at the appropriate level. Some risks identified at higher levels will be delegated to the project team for management, and some project risks may be escalated to higher levels if they are best managed outside the project. A coordinated approach to enterprise-wide risk management ensures alignment and coherence in the way risk is managed across all levels. This builds risk efficiency into the structure of programs and portfolios, providing the greatest overall

Does the project’s size in terms of budget, duration, scope, or team size require a more detailed approach to risk management?

Is a robust risk approach demanded by high levels of innovation, new technology, commercial arrangements, interfaces, or external dependencies that increase project complexity

Does the project’s size in terms of budget, duration, scope, or team size require a more detailed approach to risk management

- How strategically important is the project? Is the level of risk increased for this project because it aims to produce breakthrough opportunities, addresses significant blocks to organizational performance, or involves major product innovation?

Is this a waterfall project, where risk processes can be followed sequentially and iteratively, or does the project follow an agile approach where risk is addressed at the start of each iteration as well as during its execution