Managing Risk in Project Management

Managing Risk in Project Management

Risk as defined in standard ISO31000 is the effect of uncertainty on objectives, whether positive or negative. Thus Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

In today’s world, managing risk has become a necessity, not an option. Natural or Man-made disasters like earthquakes, floods, construction accidents, releasing faulty products to the market can occur anytime without warning. A case study on various unfortunate events that occurred in 2010 shows us, how well we were prepared, how good were our risk mitigation strategies and up to what extent these potential risks can do harm to an organization.

Be it the shutdown of European skies due to volcanic eruptions in Iceland or massive flooding in Pakistan or BP Oil Spill in Gulf of Mexico, companies have learned a lot from these events and have accordingly revisited their risk management processes.

Some of the lessons project professionals learned from these events are:

• Make Risk Management a portfolio level job.
• Diversify your project teams.
• Contingency planning is worth the investment.
• Create a culture of safety.
• Quality control saves lives.
• Don’t deliver an inferior product in the rush to the market.
• Choose your leaders wisely – and coach them how to react to disasters.