Chapter 10. Project Risks
10.0 Learning Objectives and Overview
Learning Objectives
- Define project risks and differentiate between risk types.
- Identify risks that may occur during the implementation of a project.
- Describe the process of creating a project risk management plan.
- Conduct a qualitative risk analysis.
- Develop and implement risk responses based on the identification and analysis of risks.
Overview
Although project managers can prepare a well-thought-out and comprehensive project scope, schedule, cost, quality, stakeholder, and communications management plans, they cannot ensure that all these plans are free of problems that may occur due to numerous reasons during the project. Even the most carefully planned projects can run into trouble. Our project can always encounter unexpected problems no matter how well we plan. Team members get sick or quit, resources we depend on become unavailable, and even the weather can throw us for a loop (e.g., a snowstorm). So, does that mean that we are helpless against uncertainties and problems? No! During the planning phase of our project, we can estimate some of the uncertainties with their probability and impact levels, which makes them risks. If we can immediately avoid them, they can be incorporated into the project plans. For those that we cannot take action before it may occur, we can use risk planning to identify them, analyze how likely they are to occur, to what extent they may affect our project constraints, activities, decisions, and outcomes, and plan our strategies to mitigate their impacts. This chapter will clarify what a project risk is and is not, distinguish between the uncertainties and risks, and discuss both negative risks (i.e., threats) and positive risks (i.e., opportunities). A project manager must always keep in mind that risks do not constitute solely problems or threats all the time. Risks are sometimes opportunities that we may benefit from. There are no risk-free projects because there are infinite events that can negatively or positively affect projects. Project managers must be prepared to deal with these uncertainties. Planning for events that may delay a project, decrease its quality, or increase its budget is necessary for project planning.
