A risk is a known unknown. This means that it is something that we can predict might happen, but we are not sure whether or not it really will happen. We may also not know when it might occur. We know about it, but it is unknown whether or not it will occur. Although people think of risks as having a negative impact, a risk could in fact have a positive impact. If something were to happen in a project which would make the project come in far ahead of schedule, but we do not know whether or not it would happen, it is a risk. If it occurs, we need to manage the project in one way. If it does not, we manage differently. Even though the overall impact of this risk is positive (finishing early) it may well cause some major headaches for the PM, because many resources will likely have to be rescheduled, as work will now be occurring earlier than expected. The PMBOK® Guide gives the Risk Management Processes as follows:
The risk management process is actually fairly complex, requiring a number of steps, including:
1. Risk identification
2. Establishing risk management strategy
3. Assessing risk attitude
4. Risk quantification and assessment
5. Risk Response
Many factors enter into these steps, and the process requires the involvement of many people. There are some tools, which can be used to tighten the process, but some of the risk management process relies on the intuition and experience of the people involved.
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