Everyday, project managers across the globe worry that something may occur that will derail their project.
It may be something as small as a team member staying home to care for a sick child which results in a minor delay to the project since their planned task for that day won't be completed.
Or it could be a more significant event such as a labor strike at a key supplier which results in your whole project coming to a full stop.
Events such as these are called risks.
A risk is anything that may happen that could have an unfavorable effect on your project's objectives.
The key characteristic of a risk is the uncertainty of its occurrence. Uncertainty is what differentiates a risk from an issue. A risk has some probability of occurring whereas an issue has occurred. You can think of an issue as a risk that has materialized.
As you can imagine, there are an infinite number of risks that can impact your project.
Risk management is a systematic approach to managing project risk in order to increase the likelihood of meeting project objectives.
There is a four step process for effective risk management...
Using a systematic approach such as this, you will be able to proactively manage your project's risks. You will reduce surprises and minimize the negative consequences that result from undesirable events that occur.
As a project manager, there are many reasons why you need to incorporate risk management into your project management...
So, what is risk management? Risk management is a way for you to proactively and systematically manage the uncertainty surrounding your project. It is an important aspect of being an effective project manager.