Project Management

Chapter 18 : Project Risk Management

Definition of Risk

Tolerance for Risk

Definition of Risk Management

Certainty, Risk and Uncertainty

Risk Management Methodology

Risk Identification
Risk Quantification
Risk Response
Risk Control

Insurance for Projects

Chapter Summary

The possibility of an outcome being different from what was expected is termed risk. Risk is present in every activity. Projects are exposed to various kinds of risks; technical risks, social risks, economic risks, political risks, marketing risks, human risks and production risks. On the basis of their attitude toward risk, the project managers can be broadly divided into three types: risk averters, risk neutrals and risk seekers.

The risk management process consists of four steps: risk identification, risk quantification, risk response and risk control. Different sources of risks and risk symptoms are identified in the risk identification phase. The effect of these risks are quantified in the risk quantification stage. In the risk response stage, the project manager determines how to deal with a risk to reduce its impact. Risk control is concerned with reducing the occurrence of risks.

Insurance is a popular mechanism used by many project managers to safeguard projects from the adverse effects of pure risks like employee accidental deaths, sudden machinery breakdown etc. Project managers should be aware of several project insurance policies to safeguard projects against the risks.

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