There are six core processes within project risk management.
These processes, when executed effectively, help project managers and teams identify, analyze, and respond to risks that could impact project objectives. According to Shahapur et al. (2016), these processes are:
-
Planning Risk Management: Defining how risk management will be conducted for a specific project. This includes determining the approach, tools, and data sources to be used.
-
Identifying Risks: Determining and documenting potential risks (both threats and opportunities) that could affect the project. Techniques used here can include brainstorming, checklists, and SWOT analysis.
-
Performing Qualitative Risk Analysis: Prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.
-
Performing Quantitative Risk Analysis: Numerically analyzing the effect of identified risks on overall project objectives. This often involves techniques like Monte Carlo simulation and decision tree analysis.
-
Planning Risk Responses: Developing options and actions to enhance opportunities and reduce threats to project objectives. Risk responses can include avoidance, transference, mitigation, and acceptance for threats, and exploitation, sharing, enhancement, and acceptance for opportunities.
-
Monitoring and Controlling Risks: Tracking identified risks, implementing risk response plans, identifying new risks, and evaluating risk process effectiveness throughout the project lifecycle.
These six processes are iterative and should be revisited throughout the project lifecycle. Effective risk management is crucial for project success.
