Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives.
Proper risk management will reduce not only the likelihood of an event occurring, but also the magnitude of its impact, in fact Risk Management Systems are designed to do more than just identify the risk. The System must also be able to quantify the risk and predict the impact of the risk on the project. The outcome is therefore a risk that is either acceptable or unacceptable. The acceptance or non-acceptance of a risk is usually dependent on the project manager’s tolerance level for risk.
The Risk Analysis Process is essentially a quality problem solving process. Quality and assessment tools are used to determine and prioritize risks for assessment and resolution.
The risk analysis process can be detailed as follows:
- Identify the Risk
- Assess the Risk
- Develop Responses to the Risk
- Develop a Contingency Plan or Preventative Measures for the Risk