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Indy Risk School
The Never Ending Story
As will be discussed later, the Project Risk Management process is never ending. It is typical that a project manager will undertake risk assessment at the beginning of projects but will not continue to monitor existing and new risks as they emerge. In the turbulent project environment of the 1990's, it is normal for projects to change [scope, objectives and so on]. Therefore. Project Risk Management must be on on-going and integrated component of the project management of the project.
Two different but related risk groups
Perhaps the most simple risk management model is to recognise that in the project environment, there are two different but completely related risk considerations. The first is the inherent risk of the project that is being planned - Project Risk; and the second is the exposure or impact that the company undertaking the project faces upon project failure - Business Risk.
Fig. 3 - Different but related risks
For example, a bank may be undertaking a project to implement new credit controls demanded by government legislation. The Project Risk is assessed by the project manager as being High, as the new legislation involves complex changes to sophisticated existing information systems. The Business Risk is also assessed as High because, if the bank does not implement the new credit controls by the deadline, it will face possible fines, loss of trading license and substantial public scrutiny in the media.
The assessment of Project Risk and Business Risk require consideration of different risk factors [see Business and Project Risk models] though the control and management of both areas of risk is similar.