What Happens when You do Not Manage Risk

Risk management has become an integral part of the world of entrepreneurship. Generally, risks are events that have negative effects on a business. Some of the risks can jeopardize businesses, while others can cause serious and costly damages, which may need time to rectify. Not all risks are bad. According to Heldman (2011) risks can present future opportunities as well as future threats.

All projects involve risk and the ones that succeed generally do so because their leaders do two things well. (Kendrick, 2009). They realize much of the work is not new and they plan project work accordingly. Effective project risk management involves these concepts – looking backwards to avoid past mistakes and looking forward many problems can be eliminated.

Project risk management involves the process of conducting risk management planning, identification, analysis, response planning, and monitoring and control on a project. (PMBOK, 2008). According to PMBOK (2008) known risks are those that have been identified and analyzed making it possible to plan responses to those risks. Planning responses and knowing what to do if those risks become a reality in the project can be the difference between a successful or unsuccessful process.

Kendrick (2009) points out that technical projects often come with a higher risk. This is because the projects are typically wide ranging and with new technology, there sometimes isn’t the previous work background often necessary in evaluating risks. And typically technical projects are understaffed and often outcomes are over promised. Since technology changes are so rapid it is often necessary to rush a project and this sometimes leads to project failure.

Risk is the product of two factors: t...

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... their weak spots. Thus, the identification of business risks enables managers and business owners to devise mechanisms that protect brands, as well as maintain the confidence of investors.

References

Blyth, M. (2009). Business continuity management: Building an effective incident management plan. New Jersey: John Wiley & Sons.

Heldman, K. (2011). PMP: Project management professional exam study guide (6th ed.). Indianapolis, IN: John Wiley & Sons, Inc.

Kendrick, T. (2009). Identifying and managing project risk: Essential tools for failure-proofing your project (2nd ed.). New York, NY: AMACOM.

Project Management Institute (PMI) (2008). A guide to the project management body of knowledge (PMBOK guide) (4th ed.). Newtown Square, PA: Project Management Institute.

Sadgrove, K. (2005). The complete guide to business risk management. Aldershot: Ashgate Pub.