Term Paper on Project Risk Management
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. Project risk management includes the processes concerned with identifying, analyzing, and responding to project risk. It includes maximizing the results of positive events and minimizing the consequences of adverse events.
Generally, risk is a choice in an environment rather than a fate. BS 6079 (British Standard Institution 1996) defines risk as ‘It is the uncertainty inherent in plans and possibility of something happening that can affect the prospects of achieving, business or project goals’. The word ‘‘risk’’ was known in the English language in the 17th century. It is believed that the word was originally a sailor’s term that came from the Spanish and meant ‘‘to run into danger or to go against a rock.’’ The money spent to fund shipments overseas was the first example of risk business in the early days of travel. Each and every activity we do involve risk, only the amount of risk varies.
Prof. Kent Miller of Purdue University defines risk as “Unpredictability in corporations/businesses outcome variables”. About Uncertainty he defines as “Unpredictability of environmental and organizational variables that impact the corporations/businesses performance.”
Consequences of uncertainty and its exposure in a project, is risk. In a project context, it is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome as a consequence of the uncertainty associated with following a particular course of action. Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does. Managing risk is an integral part of good management, and fundamental to achieving good business and project
INTRODUCTION
1.1 INTRODUCTION
Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. Project risk management includes the processes concerned with identifying, analyzing, and responding to project risk. It includes maximizing the results of positive events and minimizing the consequences of adverse events.
Generally, risk is a choice in an environment rather than a fate. BS 6079 (British Standard Institution 1996) defines risk as ‘It is the uncertainty inherent in plans and possibility of something happening that can affect the prospects of achieving, business or project goals’. The word ‘‘risk’’ was known in the English language in the 17th century. It is believed that the word was originally a sailor’s term that came from the Spanish and meant ‘‘to run into danger or to go against a rock.’’ The money spent to fund shipments overseas was the first example of risk business in the early days of travel. Each and every activity we do involve risk, only the amount of risk varies.
Prof. Kent Miller of Purdue University defines risk as “Unpredictability in corporations/businesses outcome variables”. About Uncertainty he defines as “Unpredictability of environmental and organizational variables that impact the corporations/businesses performance.”
Consequences of uncertainty and its exposure in a project, is risk. In a project context, it is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome as a consequence of the uncertainty associated with following a particular course of action. Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does. Managing risk is an integral part of good management, and fundamental to achieving good business and project
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