This document discusses the importance of project risk management. It states that proactively managing risks can help projects succeed, while failing to manage risks can lead to problems. It also discusses developing a risk management plan and process to identify, assess, respond to, and manage risks throughout a project. Finally, it discusses taking a holistic view of risk management across an entire project portfolio.

1. CHAPTER 1
Practical Application of Project Risk
Management

2. Overview:
Proactive employment of project risk management
concepts by project managers and their teams can
make a substantial difference between being successful
or unsuccessful in achieving project objectives.
Thus, organizations become driven to overtly take
greater risks in their product development processes -
risks that can lead to better financial performance if
understood and managed well, but conversely, if not
understood and managed well, can lead to a crisis
management culture, organizational frustration, and
ultimately to detrimental business/financial results.
2
Dr. Anis ur Rehman, CBA, UOH, KSA

3. By understanding the typical causes of unsuccessful
project execution, one can formulate a methodology that
ensures that all risks which are critical to a project's
success are at least considered, appropriately
communicated, and bought into (i.e., agreed to by all
stakeholders). The practical application of sound project
risk management principles can then become more
effective, leading to better predictability relative to
project execution and higher probability of success for
all organizational endeavors.
3
Dr. Anis ur Rehman, CBA, UOH, KSA

4. The practical implementation of project risk
management tools and techniques starts with the
establishment of a sound risk management plan. This
plan is developed and augmented by a risk management
process that facilitates identifying, assessing,
responding to, and managing risks throughout the
project planning and execution processes.
4
Dr. Anis ur Rehman, CBA, UOH, KSA

5. Portfolio Project Risk Management—
A Holistic Perspective
Project risk management not only permeates the project
management process, but when considered holistically
becomes an organizational asset that feeds off and affects
the entire project portfolio—past, present and future.
Figure 1.1 provides a graphic depiction of the build-up of
project risk management influences. Arguably the most
impactful and foundational aspect of project risk
management is the process of identifying, analyzing,
responding to, managing and controlling, and
organizing/communicating (via a risk management plan)
project risks—referred to as project risk management
basics in Figure 1.1. 5
Dr. Anis ur Rehman, CBA, UOH, KSA

6. 6
Dr. Anis ur Rehman, CBA, UOH, KSA

7. When taken in its entirety, portfolio project risk
management can be a powerful concept for
ensuring project success and organizational or
business competitiveness.
7
Dr. Anis ur Rehman, CBA, UOH, KSA

8. Practical Project Risk Management Concerns
The following is a list of some key relevant
questions addressed by this material:
• How do you develop a project plan that effectively
takes risks into account?
• What is the significance of rebalancing a project plan,
and how is it done?
• How do you know whether or not you have
successfully identified all the project risks that are
germane to your project's success?
• How do project requirements, stakeholder
expectations, and resource capabilities affect project
risk—and what can be done to effectively deal with
these risks? 8
Dr. Anis ur Rehman, CBA, UOH, KSA

9. • How do you determine the best practices to apply to
your particular project?
• What is the right product development process (or
product-oriented process, or new product introduction
[NPI] process) to follow, and how is it determined?
• What are project postmortems? How are they
conducted? How can they help?
• What capabilities should the project manager, team
members, and performing organization(s) possess to
plan and execute their project(s) successfully?
9
Dr. Anis ur Rehman, CBA, UOH, KSA