In recent times, risk management has become one of the most important aspects of project management because of the rate of financial crisis and natural disaster in the world right now and the rate of increase in expectation from the stakeholder in an organisation. But firstly, project brings about risk management so what is project? Project can be defined as a group of people working in a unique way in a period of time to achieve a specific goal. And in achieving that project management come into place, project management is according to (PMBOK 2004) ‘The application of knowledge, skill, tools and techniques to project activities to meet the project requirement’. Project management involves estimating, planning and monitoring events that occur during the duration of a project. In cases where things have gone wrong, it is seen that risk management is highly necessary in projects these days because there are many factors that affect projects like cost estimate, performance and scheduling in this recent time of the world. In this essay, I will discuss about risk in a project, the necessities of risk management in a project, ways to solve the problem in risk management and techniques for managing a risk in a project which include risk identification, risk assessment, risk response planning, and risk control and monitoring.
Risk is defined as a possibility of an occurrence in a project, which might be a negative or positive impact on a project, even in decisions made by us in our everyday life there is a certain amount of risk involved in it. For instance, walking down the staircase of our homes an unexpected incident can occur like we stumbling on the stairs which wasn’t foreseen and there are some kinds of risk that you actually know it going to occur.
Management is organizing of people to achieve a common goal. Management involves the planning, monitoring, and control of people, process, and events that occur as software evolves from a preliminary concept to an operational implementation.
Risk management is defined as according to (PMBOK Guide, 2004) “The processes concerned with conducting risk management planning, identification, analysis, responses, and monitoring and control on a project. The objectives of project risk management are to increase the probability and impact of positive events and decrease the probability and impact of event adverse to project objectives”
Based on the question why is risk management necessary? “Risk management is essential for a wide variety of development and production projects because certain information about key project cost, performance, and schedule (C, P, S) attributes are often unknown until late in the project” (Edmund .H. Conrow, 2000). Project cost, performance, and schedule, these are the factors a project manager has to put into consideration when starting a project, risk management is needed in a project before it is commenced so that the project manager has to have a backup plan and avoid...