What is risk management?
Risk management defines the general philosophy and procedure for dealing with project risks. Risk analysis and risk management deal with the mutual concern of client and project team that the characteristics of the developed system correspond to the project goals with regard to technical functionality, costs and deadlines.
The risk management approach comprises a continuous and iterative process of risk identification, risk planning and risk controlling throughout the project. Risk management is already initiated in the preparatory phase of a project and is continued throughout the entire project life cycle. Risk management is one of the core elements of project planning and at the same time one of the most important factors for the success of any project.
Risk management itself is an ongoing and continuous process from the definition, planning and implementation phases of the project. The approach used in risk management comprises a number of interrelated tasks. They are summarized below and are described in more detail in the following sections.
The tasks are:
- risk identification
- risk assessment
- risk prioritisation
- action planning
- Risk monitoring and tracking
Risk management is primarily the responsibility of the project manager (or the bid manager during the bidding phase). Nevertheless, the involvement of project team members, clients and subcontractors is essential if all potential risks are to be identified and managed. In large projects it is appropriate to appoint another team member as responsible risk manager in order to relieve the project manager of this time-consuming task.
— Translated from Source: Projektmanagement mit Merlin, Germany, Hanser-Verlag 2009