Risk is defined as the sudden unexpected change in the working environment. The risks can be associated with the processes and the project management. The risk defines the unwanted event that occurs in the working environment that will create the effect on the project or the process environment in a positive or the negative way. In most of the cases, the risks associated with the project management has the negative effect on the projects (Kerzner and Kerzner 2017). The main objective of this paper is to observe the significance of the risks in the process management and the effect of the risks present in the project management. In order to discuss the significance different kinds and the variations of the risks are evaluated. Apart form that the cycle of the risks in the process has been discussed. This discussion will lead to the importance o the risks planning and the management of the risks. The risks can be both positive and negative. The positive risks opens up the new opportunities in the project management process , while the negative risks create constraint in the project management (Zhao, Hwang and Phng 2014). The main objective of this paper is to evaluate the risks in project and implement certain techniques to manage the risks associated with each of the project. There are specific techniques discussed in order to manage the risks in the project. The importance of developing the risk matrix has been described along with the way to develop the matrix.
The risks can be defined as the unexpected change in the project environment. The changes can be both positive and the negative. There are different definitions of the risks which can be presented for the understanding of the risks (Zhao, Hwang and Phng 2014). There are different types of the risks present in the process. However, the origin of the different types of the risks are different.
Scope of the risk management: The scope of the risk management includes the understanding and the managing of the project. The project management risks defines the managing of the risks in the project. The project risk can be both positive and negative (Zhao, Hwang and Phng 2014). In case o negative risk management, the main objective is to implement the strategy that will help to mitigate the bad impacts of the risks in the project process. On the other hand for the positive risk, the strategy will evaluate the opportunities those can be implemented in the project development. Both these tasks are carried out by the risk management.
The importance of the risk management: The main objective of the managing the risks in the project is to handle the project in a right way so that the processes in the projects can run smoothly. The initial stage of the risk management is the identification of the risks. The risks can initially divided into two categories- positive risks and negative risks. The negative risks present constraint in the project management process (Bromiley et al. 2015). Some of these constraints are exceed in the budget and time, scope creep in the project. Some of the risks are also considered in the project management environment as the positive risks. These types of risks can be the change in the use of technology in the project management process , so that the project can become more advanced. The positive risks in the project management enhances the scope and the effectiveness of the project.
Sources of the risks: The identification of the risks are associated with the sources of the risks. The risks can be both internal and external. The internal risks are also known as endogenous risks (Lee et al.2017). These types of risks are the internal risks of the organization and can be controlled through the changing of the parameters. Some of the examples of the internal risks are timing and the resources for the projects.
The external risks are known as the exogenous risks. These kind of risks are harder to detect and control. The external risks are from the outside of the organization, effecting the progress of the organization and the projects.
Types of risks: There are several types of risks such as-
Perception of the individuals about the risk: The definition and identification of the risks in the process or the project is highly dependent on the perception and the experience of the project managers. The project managers identifies and give priority to the risks associated with the project depending on the past experience (Aloini et al.2015) .It can be said that clear and right identification of the risks are dependent on the accurate interpretation of the past experience of the project managers. The attitude for handling the risks also differs from managers to managers.
Calculated risks: The calculated risks are the task of assigning the priority of the risks by the individuals on the basis of the probability of the happening of the risks and the positive or negative effects of the risks. The risks are ranked from highest to lowest ranks.
Utility: Utility is the value for the utilization of something. Here the utility refers to the handling of the risks and making the opportunities in the project or the process (Hopkin 2017). Some of the people will not take risks will go for the safe options and some people will take the calculated risks, which is they will select the risks from the risks matrix in order to gain or explore opportunities in the course of the process.
The handling of the risks are different for the individuals and the project managers. The individuals may or may not take the risks in order to compile a task or the process.
However, the project managers can not eliminate the chances of taking risks in the project management process. In that case, they have to take the calculated risks while developing the project (Muriana and Vizzini 2017). While taking the calculated risks the project managers are needed to choose the right option based on the monetary value or the expected value. In this case, the risks are not evaluated by the highest psychological value or the utility.
Limitations of the calculated risks: There are some limitations of the calculated risks. One of the main limitation is that sometimes the calculated risks are not easy to determine for the business or the process (Zhao, Hwang and Phng 2014). The difficulty of the identification may arise because of the less information about the possible risks and the short time span. In order to eliminate these limitations the development of the risk structure can be maintained.
Project risk management: The project risks management is the identification of the risks and the elimination strategy of those risks in the developing phase of the project. It has been seen the risk management is underrated but significant process in the project management process. The ignorance of the risk management process may result the failure of the project.
The risk management in the project can be done through the risk management planning. There are several steps in the risk management planning. These steps include:
Identification of the risks: The identification of the risk is the important and initial thing in the risk management process and planning (van der Vorm et al. 2015). The identification of the risks in the project can be done through the evaluation of the past results and the previous projects. Sometimes the expert opinions from the teams can also be sued in the identification of the risks. The identification can be done through the application of some techniques such as ‘Delphi’ process.
Analysis of the risks: The analysis of the risks can be done using the two methods- qualitative and quantitative analysis. The qualitative analysis is based on the expert judgement and the reviewing the past records . On the other hand the quantitative analysis is based on the statistical data and analysis such as decision tree and Monte Carlo analysis (Meredith et al. 2016). In case of qualitative analysis the risk matrix is used (Qazi et al. 2016). The risk matrix examines the risks from the view point of the probability. The consequence of the happening and the impact of the consequences of the actions on the development of the project outcome is considered in this case. The analysis can be done in two ways (Brack et al. 2015). Assigning the categories to the risks such as high , low and medium, on the other hand allocating the numbers or rating from 1 to 10 to the risks.
In case of quantitative risk analysis the decision tree is used. The decision tree is the visual representation of the risks and their consequences. The assumptions regarding the risks are made while developing the decision tree.
Response strategy to the risks: The identification of the risks needs the strategy for responding to the risks. The identification of the risks are done through the several process. After the identification of the risks the ranking of the risks are done (Hwang,Zhao and Toh 2014). The strategy for handling the risks according to the ranks are then evaluated. The main step followed by this is the making of the strategy to response to the risks. The risk response planning is different for the positive risk and the negative risk. As discussed earlier, the positive risks enhance the opportunities during the development of the project on the other hand the negative risks create constraints in the project management process. Different planning is needed to be done for handling the negative risks and explore the positive risks.
In case of the negative risks there are several strategies for responding to the risks. After identification of the risks one of the following strategies are needed to be taken:
The strategies for exploring the positive risks are:
The strategies for dealing with the risks are depended on the situation and the time of the risks happening. It also depends on the availability of the resources (Fleming and Koppelman 2016). Certain exam-le can be presented in this case. In some of the construction projects, it the human resource that is labour is less in the number, the number of labour can be increased using the higher pay scale and providing them certain benefits.
Monitoring and controlling the risks: Monitoring and the control of the risks happen throughout the whole process. The main function of the monitoring is the monitoring of the cost, time and the resources needed for the project development. On the other hand the controlling of the project includes the control of the flow of the information throughout the project and collection of the information regrading the risk (Hu et al. 2016). These information can be beneficial for managing and identification of the risks associated with the project management. The monitoring and the control phase of the risk planning process is responsible for the review of the identified risks. The corrective actions can be taken on the basis of the review (Parihar, Bhar and Kumar 2015). These actions can help to mitigate the negative risks in the process and will enhance the exploitation of the positive risks.
Top 10 risk tracking system can be used to maintain the awareness regarding the risk throughout the projects. In this process, the top 10 risks in the process are identified (Marcelino-Sádaba et al. 2014). The review of those 10 risks are down in a periodic fashion. This tracking system lists the risks mentioning the current and previous status of the risks, the number of times they have appeared in the process and the progress to resolve those risks in the process. This list helps to mitigate the happening of the negative risks in the process.
Risk register: In order to keep the account of the happening of the risks in the process the risk register is used. The risk register is generally presented in a spreadsheet which shows the result of the various risk management (Wang 2017). The information it contains includes the information about the review of the risks , ranking of the risks. The risk register is the list of all the risks with the detailed information which is used for maintaining and managing the existing risks in the process of the project management. The risk register can further be used in the future projects.
Comprehensive review of the literature of the managing of the risks:
There are various article state about the managing of the risks and its significance. The risk management in the project is an important step (JOSEPH et al.2018). The evaluation of the risks in the project will help the project managers to eliminate the possible risks from happening , apart from that it will also help to evaluate certain opportunities in the project management process (Titman,Keown and Martin 2017). The definition of the risks are evaluated on the basis of the project management. Certain change in the condition or the situation can cause the risks in the process of development of the projects.
The project management process will deliver the right outcome if the risks associated with the projects are reviewed and handled in a proper way (Hornstein 2015). One of the major risk in the project management is the scope creep. The scope creep of the project management denotes the sudden changes in the requirement of the process. One of the main technique for mitigate the chances for the scope creep is to make the clarity in the requirements.
Different articles has been discussed about the risks in the project management from the various perspective (Zhao, Hwang and Phng 2014). However, the handling of the different kinds of risks in the project management along with the basic definition of the risks was not elaborately discussed in many of the articles.
The risk can be said to the unpredictable condition in the development of the process. The risk can be included in the process of managing the project. Project managers can not eliminate the chances of the risks. Therefore, it is important for the developers and the project managers to evaluate the possible risks associated with the project. The risks can become the new opportunity for the development of the project. The risks can indicate certain flaws on the project. Working on that flaw may help the project to get improvised (McNeil,Frey and Embrechts 2015). The risks also indicates the gap between the requirements and the existing processes in the project. There are two functions of the risk management planning, one is to mitigate the negative effect of the risks on the project and the process and the other is to exploit the positive risks (Reed and Angolia 2018). The implementation strategy of the risk handling in right way can be done through the use of different analysis tools and the techniques like risk register and the risk matrix. There are certain steps for managing the risks. It can be said that the proper risk management can bring out the right outcome in the project management.
The assessment of the risks is important for the accurate outcome of the project. The risk is associated with the every action. The acceptance of the risk is dependent on the individuals. In the real life situation a person may or may not take the risk. However, in case of the project management , the project managers can not eliminate the risks in the project. In that case, the project managers have to take the calculated risks. While taking the risks the assessment of the risks are needed to be evaluated on the basis of the systematic analysis of the risks rather than dependency on the utility or the psychological judgement regarding the risks. The right ranking of the risks in the risk management will help the project managers to implement the right risk management strategy. It has been seen that the proper risk assessment in the project helps the project to deliver the right outcome. As , the effect of the positive and the negative risks are different the handling strategy for these two types of risks are also different. In case of the positive risk the main objective of the managing strategy is to exploit the possibility and the opportunities that can be received from the positive risks. Project may be failed in the absence of proper risk management. This article has discussed the risk in the project form the basic level. Apart from that it also discussed about the significance of the risk including the critical analysis of the presence of the risks on the basis of the various parameters. It can be said from the discussion from the paper the risk plays an important role in proper compilation of the project. Hence the management and the planning of the risk is needed to be done in a right way.
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