Thanks for your interest in Project Risk Management (PMBOK®). You find the definition and the processes involved in Project Risk Management and free downloadable templates on this page.
The Project Risk Management Plan is a component of the Project Management Plan that describes how risk management activities will be structured and performed.
Definition of Project Risk Management
The PMI™ defines Project Risk Management as:
Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. The objectives of project risk management are to increase the likelihood and impact of positive events, and decrease the likelihood and impact of negative events in the project.
Project Risk Management Processes
The PMI™ defines the processes as follows:
- Plan Risk Management
- Plan risk management is the process of defining how to conduct risk management activities for a project.
- Identify Risks
- Identify risks is the process of identifying individual project risks as well as overall sources of project risk, and documenting their characteristics.
- Perform Qualitative Risk Analysis
- Perform qualitative risk analysis is the process of prioritizing individual project risks for further analysis or action by assessing their probability of occurrence and impact as well as other characteristics.
- Perform Quantitative Risk Analysis
- Perform quantitative risk analysis is the process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives.
- Plan Risk Responses
- Plan risk responses is the process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks.
- Implement Risk Responses
- Implement risk responses is the process of applying agreed-upon risk response plans.
- Monitor Risks
- Monitor risks is the process of monitoring the implementation of agreed-upon risk response plans, tracking identified risks, identifying and analyzing new risks, and evaluating risk process effectiveness throughout the project.
How to Manage Project Risk?
Project Risk Management is certainly one of the areas that deserves a lot of attention. Yet many project managers believe it would be sufficient to just add a certain percentage to their cost estimates to serve as a contingency. Not only that, of course, this is not satisfactory risk evaluation, the percentage is often pluck out of the air.