Managing Risk in Projects

Introduction

In order to effectively manage the risks associated with complex, high profile projects, project managers need a set of tools tailored to a project context.

Project management decision-making, including the level of contingency set aside for budget and schedule overruns, can be affected by the cognitive biases of stakeholders.

Several well-established project management frameworks have risk management modules which can provide project managers with guidance in this area.

Elements of project risk management

Typical elements of a project risk management framework include:

• Project governance
• Project assurance
• Cost risk management
• Schedule risk management
• Contingency risk management
• Scope risk management
• Change control
• Benefits management

Many disciplines contribute to project risk management, including risk engineering and safety. Managing risks for individual projects also needs to take into account risks that may be introduced by related projects and areas within the project management organisation, and at the program and portfolio levels.

Standards and Frameworks

Some of the standards and frameworks specific to project risk management are:

• PMBOK - The US-based Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK) framework includes a module on how risk management should be performed in a project context. This standard is used across a range of industries. PMI has also published a risk-specific standard: The Standard for Risk Management in Portfolios, Programs, and Projects
• PRINCE2 - Projects In Controlled Environments (PRINCE2) is a popular, UK-based project management standard. It was originally developed as a government standard for information systems projects and includes a risk management approach including a risk register
• COBIT 5 - Is a recent standard for project management which includes a risk management module. This standard links risk management to governance and insurance, where PRINCE2 and PMBOK treat them as individual modules. and is used extensively in projects to implement information technology solutions such as SAP and Oracle.

Challenges

A particular challenge for complex projects is building the maturity of internal control systems to increase resilience in the event of unpredictable risks. For this reason, momentum is building in emerging risk management methods including complexity sciences and organisation-wide resilience.

Further reading

Click this link for a list of related pages

Sources:

The content on this page was primarily sourced from:

• Webinar titled ‘Perspectives on Risk: Engineers, frameworks and new ways of thinking’, delivered to REBOK Community on 29 May 2018 by Warren Black, Principal and Founder, Complexus