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Chapter 11: Introducing Project Risk Management
R
isk is everywhere. From driving a car to parachuting, it’s inherent in the activities we choose.Within a project, risks are unplanned events or conditions that can have a positive ornegative effect on its success. Not all risks are bad, but almost all are seen as a threat.
The risks that activities bring are an exchange for the benefits we get fromaccepting that risk. If a person chooses to jump out of a perfectly good airplanefor the thrill of the fall, the exhilaration of the parachute opening, and the viewof earth rushing up, there is a risk that the chute may not open—a risk that thrillseekers are willing to accept.Project managers, to some extent, are like these thrill seekers. Parachutists completetraining, pack their chutes, check and double-check their equipment, and make certainthere’s an emergency chute for those “just-in-case” scenarios. Project managers—goodproject managers—take a similar approach.Risks in a project, should they come to fruition, can mean total project failure,increased costs, and extended project duration among other things. Risk often hasa negative connotation, but like the parachutist,the acceptance of the risk can also offer a reward.For the parachutist, the risk is certain death—butthe reward is the thrill of the activity. For projectmanagers, risk can mean failure, but the rewardcan mean a time or cost savings, as well as otherbenefits.Risk management is the process in which the project manager and project teamidentify project risks, analyze and rank them, and determine what actions, if any,need to be taken to avert these threats. Associated with this process are the costs,time, and quality concerns of the project brought about by the solutions to thoserisks. In addition, the reactions to risks are analyzed for any secondary risks thesolutions may have created.In this chapter, we’ll discuss risk management planning, risk identification, analysis,response planning, and the monitoring and control of the identified risks. For the PMPexam, you’ll need a firm grasp on these concepts. You’ll be taking a
real
risk if you don’tknow them well.
Positive risks are called opportunities.
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