Project Risk Management (PRM) is one of the properties in management that a project manager must take account into for a proper planning and help smoothing of the project. PRM contains of identification, analysis, response plan, monitoring, and controlling plan. ‘Risk’ often measured against the three basic properties such as scope, time and cost. It is better for a project to manage the risk at early stage such from conception stage until the support stage (Ward and Chapman, 2003).
The word ‘risk’ can be defined as ‘the relevant uncertainty’. A more refined definition will be ‘the uncertainty that will affect one or more objectives which is in other words are relevant uncertainty’. It is common for the word ‘risk’ to be confused with uncertainty since it brings ambiguous meaning and feeling.
Although it may sounds easy to define the word risk, Dowie (1999) does not think it so. He finds that it is hard to define the word risk as stated above, it brings an ambiguous meaning and often confused with ‘uncertainty’ and he supported the way Kaplan (1997) viewed the word ‘risk’. Both of them try to claims that the meaning of word ‘risk’ is dependent with a person perspective. For example, according to US Project Management Institute (PMI), risk is defined as ‘an uncertain event or condition that if it occurs, it has a positive or negative effect on a project objective’ and UK Association of Project Managers (APM) defined that risk is ‘an uncertain event or set of circumstances that should it occur will have an effect on the achievement of the project’s objectives’. Although the definition between PMI and APM are similar, it might be differ from another profession perspective. Kaplan (1997) viewed was justified when according to Perminova et al (2008), an economist viewed the term ‘risk’ as events subject to known or knowable probability distribution while Ward and Chapman (2003), quoting dictionary term of risk as “…“hazard, chance of bad consequences, loss, exposure to chance of injury or loss” (Concise Oxford Dictionary)...”.
Based on the above definition, it is hard to define a definite definition for the word ‘risk’. A person view is different from another and their definition of risk will vary according to their experiences. There is no solid guideline about what is the criteria of ‘risk’. How big or small we can label up the type of risk. Does it depend on the person or does it have written guideline. For examples, manager X with a lot of experiences might view Z project as less risky and another manager Y with a lot less experience might view project Z as the riskiest project he ever done. The word ‘risk’ also might differ according to the size, type and environment of the company and organization (Perminova et al, 2008). These possibilities make a project manager doubting them self when identifying ‘risk’ at the early stage thus causing them to over or under estimating the ‘risk’. This also can affect the way them gathering information and...