Risk

Uncertainty concerning the occurrence of a loss.

objective risk

The relative variation of actual loss from expected loss Objective risk can be statistically calculated by some measure of dispersion. subjective risk Uncertainty based on a persons mental condition or state of mind. The impact of subjective risk varies depending on the individual perception of risk Risk Management A process that identifies loss exposure by an organization and selects the most appropriate technique for treating such exposure Proper risk management is proactive rather than reactive positive rather than negative

Proper risk, management will attempt to reduce the probability of an event occurring and/or the magnitude of its impact as well as increase the probability of project success. To be successful, the organization should be committed to address risk management proactively and consistently throughout the project. Objectives of Risk Management Pre loss Objective prepare for potential losses in the most economical way the reduction of anxiety to meet any legal obligations Post loss Objective survival of the firm to continue operating stability of earnings continued growth of the firm social responsibility Project Risk Management
It is important that a risk management strategy be established early in a project and that risk be continually addressed throughout the project lifecycle.

The overview of project management process

Plan Risk management Risks associated with the project generally concern the project objectives, which in turn impact time, costs, or quality, or any combination of the three. The purpose for Risk Management Planning is to create a risk management plan, which describes how you will define, monitor, and control risks throughout the project.

Plan Risk Management: Inputs: 1. Project Scope Statement: The project scope statement provides a clear sense of the range of possibilities associated with the project. 2. Cost Management Plan: Project Cost Management includes the processes required to ensure that the project is completed within the approved budget. Resource Planning Cost Estimating Cost Budgeting Cost Control 3. Schedule Management Plan: The purpose of the schedule management plan is to define the approach the project team will use in creating the project schedule. This plan also includes how the team will monitor the project schedule and manage changes after the baseline schedule has been approved. 4. Communications Management Plan: Communications Management Plan sets the communications framework for the project. It will serve as a guide for communications throughout the life of the project and will be updated as communication needs change. 5. Enterprise Environmental Factors: Enterprise environmental factors refers to an input output mechanism that is meant or intended to measure and determine the particular and specific external and/or environmental factors that cause for significant noise and influence surrounding the ultimate success of a particular phase of a project or of the project as a whole. 6. Organizational Process Assets: The organizational process assets that can influence the Plan Risk Management process. Plan Risk Management: Tools and Techniques: 1. Planning Meetings and Analysis: Project teams hold planning meetings to develop the risk management plan. The purpose of these meetings; who attends; when they are held; what to bring to the meetings; a sample agenda; and finally, the result. Understanding the purpose of these meetings is important to carrying them out properly.

Plan Risk Management: Outputs:

1. Risk Management Plan The risk management plan describes how risk management will be structured and performed on the project. It becomes a subset of the project management plan Methodology Roles and responsibilities Budgeting Timing Risk categories Definitions of risk probability and impact Probability and impact matrix

Revised stakeholders tolerances Reporting formats Tracking