Glossary term
Project Risk Management
Subject: Risk Management, Strategic and Systemic Risk
Project risk management is the practice of identifying, assessing and responding to uncertain events that could help or harm a project's cost, schedule, scope or quality, from planning through delivery.
Explanation
A project is a one-off effort with a fixed goal, budget and end date, so its risks are tracked on their own rather than through the organisation's general risk process. The usual cycle starts with planning and identifying risks, often in a workshop. The team then scores each by likelihood and impact, chooses a response (avoid, reduce, transfer or accept) and names an owner. All of this goes into a project risk register, which is reviewed at regular meetings as the work moves on. Time and cost buffers, called contingency, are set aside for risks that remain. The same method also records opportunities, meaning uncertain events with a positive effect. Project risks feed upward into programme and enterprise reporting when they could affect strategy. Overruns usually trace back to a risk someone knew about early and nobody owned.
Example
A hospital group starts replacing its patient records system. In the first workshop the team lists data migration errors, vendor delays and staff shortages. Data migration scores highest, so the owner schedules two trial migrations and keeps a contingency of 10% of the budget. When the first trial fails, the issue is already on the register and the sponsor sees it within days.
Not to be confused with
- Enterprise Risk Management
- Enterprise risk management covers the whole organisation's risks. Project risk management covers only the uncertainty around one defined project.