Question

Where in the five step risk management process could you determine that a project is worthy or not worthy of pursuing? Is there one step more important than the other?

Answer 1

Five step Risk Management process includes the following steps:

1. Idenfity the Risk

2. Analyze the Risk

3. Evaluate or Rank the Risk

4. Treat the Risk

5. Monitor and Review the risk

To determine whether a project is worthy or not of pursuing, above five steps needs to be carefully examined. First the project owner should identify the potential risk in the project. After idenifying the risk, the project owner should analyze those risk from diferent prespectives. For example the project owner wants to purchase a property, the potential risk will be whether he is buying the property from the rightful owner or its a fraud transacation. Similarly the project owner can analyze differnt risk identified at step 1. After analyzing all the potential risk, these risks should be ranked or evaluate according to their severity and see their potential impact on the project. Now that all the potential risks have been evaluated, what can be the potential treatment for these risks. Continuing our previous example, if you want to assess whether you are buying the property from the righful owner then you can go the registrar office and check whether property is in seller's name or not. Accordingly you assess the potential mitigation of all the identified risks and it may be possible that some risks are not mitigated. For those risk which can not be mitigaged then the project owner has to assess whether he can bear the risk in case it gets materialize. Lastly monitoring the risk is very important so that no futture threat to the project.

All the above steps mentioned are equally important and leaving any one of them can jeopardize the sustainability of the project. So a project owner should make sure that he is following all these steps.