Best Practice In Risk Management

"Best practice in project risk management is concerned with managing uncertainty that matters in an effective and efficient manner." Critically discuss.

Introduction

Risk management is an extremely important aspect of project management that sometimes is overlooked by novice project managers. Lewis, J. P. (2006) defines risk management as the systematic process of identifying, quantifying, analyzing and responding to project risk.   He added that, it includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives. In any project that we undertake, whether in-house or in partnership with an external party, they entail risk. Project risk requires careful management and involves identification, assessment and mitigation. It is important at the beginning of any project to go through the risk identification process.

The benefits of managing risks in projects are huge. The study by KPMG (Best Practices in Risk Management), reported many benefits of managing risk including: improving financial and operational management by ensuring that risks are adequately considered in the decision-making process; and increased accountability of management.   In project management, risk management can translate to huge savings if the uncertain project events are handled in a proactive manner.   Managing risks allows the project to be delivered on time; expenses kept within budgets and results that meet the expectations of the overall project.   Periodicity and efficiency is at its best when team members do not waste time troubleshooting or “fire fighting” problems and failures, which can be prevented with risk management.

In the real world, the best plans are never enough.   We need to anticipate the threats and opportunities, which might throw our project plan off course. The company that manages its risks more efficiently than its rivals has a distinct competitive advantage....