RISK Management
Project and business risks involve new assumptions about project planning and control.
Impact from existing business issues

First, risk has been narrowly treated in the context of projects and project tasks, but the sources of risk are more appropriately addressed at the business and industry level first. The prevailing notion about project risk management has been the assumption that knowledge of internal, project-oriented planning and control issues was most important in forecasting and managing risks and costs. This assumption has driven the subject of project risk management in directions that focus on internal project tasks and risks. But business analysts increasingly find that emerging external business issues often have a much greater impact on the future of their organisations -- and on project success - than any internal issues. Hence, the roots of project risk lie in the forces acting on the company, and the customer, as a whole.
Project risk cannot be separated from business planning

Second, and as a consequence of the first point, project risk cannot be separated from business planning, project selection, planning and control. It is integral to these processes. Risk is the core planning challenge at the heart of business development, and later, project management. The separation of risk management process from the rest of the broader business and project management paradigm is the wrong approach to the subject because it implies that somehow risk is largely internal to a project and therefore controlled by the project team.
Since project risk is business risk, the whole business strategic planning, marketing, and risk analysis process is directly relevant to project risk. Risk applied to a business framework produces SWOT analysis and other outputs that support identification of project risks. These risks include competition, unanticipated technology change, market shifts, business finance, workforce issues, and changes in the customer base.
Third, risk management is largely a leadership and management challenge first, not fundamentally a quantitative process as portrayed on texts on the subject. Organizational culture drives the approach to risks. Risk is actually qualitative and intuitive and brings out the most creative juices of the project process.
Third, risk management is largely a leadership and management challenge first, not fundamentally a quantitative process as portrayed on texts on the subject. Organizational culture drives the approach to risks. Risk is actually qualitative and intuitive and brings out the most creative juices of the project process.
Benefits of Risks
It is important to see risk as a trade-off with benefits, and opportunities, and payoffs. In other words, risk is the reason for investment; it is to seek out profitability by reducing uncertainty and gaining benefits in terms of customer value and profitability. The matrix above details this for a business portfolio scenario.
Quadrant 1
Project are not worth doing due to uncertainty about outcomes. Also very little foreseeable payoffs. Might include some R&D projects which may move from this quadrant to the next when unexpected payoffs are uncovered.
Quadrant 2
Projects here are major investments with high risks of failure, but with outcomes that could substantially increase market share or company growth, profitability. E.g. energy efficiency projects.
Quadrant 3
Not worth doing because no foreseeable payoff, even though payoff is minimal. Example is superficial landscaping improvement to a plant location when the permanence and viability of the plant itself is in question.
Quadrant 4
Projects here are attractive because for minimal risk there is a potential high benefit. Example would be a proven technology that promises to double the capacity of a current plant or facility.
Risk Management Culture
Building a culture of risk management is primarily a process of developing people in your organisation who think and plan projects effectively, and who are supported by company systems that encourage them to think and plan effectively.
If the organisation does not address risk in the way work is being done, risk management will fail. Defining culture as the way work is done in the organisation, if risk is integrated in the way work is done, risk planning becomes an expected part of planning. If risk is given lip service but it is not being backed up, then risk management will be superficial and ineffective.
If the organisation does not address risk in the way work is being done, risk management will fail. Defining culture as the way work is done in the organisation, if risk is integrated in the way work is done, risk planning becomes an expected part of planning. If risk is given lip service but it is not being backed up, then risk management will be superficial and ineffective.