Risk Management

Importance of Risk Management in Project Success

Identification and analysis of project risks are required for effective risk management. An inappropriate organization, inadequate definition of scope, and poor planning will undoubtedly lead to project failure. However, project risk management is not merely limited to the identification and aggregation of risks, but it demands additional effort to develop and apply risk management strategies. In this article at PMI.org, Hans Petter Krane, Asbjorn Rolstadas, and Nils O E Olsson explain the contribution of project risk management to the achievement of project objectives.

Impact of Risk Management on Project Success

To increase the chances of proposed project success, organizations and project managers must have a thorough understanding of potential risks. Managers must quantitatively and systematically assess these risks, anticipate the possible cause and effect, and select appropriate methods of dealing with them. To manage the potential risk effectively, you must explicitly build the risk process into the decision-making process. What’s the impact of effective risk management strategies on project success?

Evaluates the Entire Project

Effective risk management strategies evaluate the project’s success so you can use the best practices on your next project. For example, if you develop and deliver a training program that spreads awareness about cybersecurity, you must measure the number of help desk calls received about cybersecurity issues. If the number of calls goes down, it means risk management initiatives have contributed to the success. If not, you must revise your training program.

Maximizes the Results

Risk management processes will make success more likely by eliminating risks so that your team can complete the project on time. It further enables you to fulfill targeted objectives and meet the budget. With effective risk management strategies in place, your company can maximize profits and minimize expenses on activities that don’t produce a return on investment.

Contributes to Project Success

The risk management plan contributes to the project’s overall success by establishing a list of internal and external risks. Low-risk events will have little or no impact on the schedule, performance, or cost. Moderate risk disrupts the schedule and decreases the quality of the project. High-risk events will cause a significant increase in the budget, exceeds the timeline, and leads to performance problems.

“… projects should emphasize identifying more short- and long-term strategic risks at all project stages,” say authors. To read the original article, click on https://www.pmi.org/learning/library/categorizing-risks-project-risk-management-6847.

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