Risk Management

Projects contain uncertainties and thus involve (1) the probability that something could go wrong and (2) adverse consequences that will occur if it does go wrong. The product of these two factors is called risk, and taking precautionary steps to minimize risk is called risk management. More specifically, risk management refers to assessing, reducing, and controlling risks so that project objectives are met without requiring excessive schedules or resource budgets.*

In a sense, all of project planning and control can be considered risk management. In this chapter, however, we focus on techniques that extend beyond ordinary planning and control. These techniques become increasingly important as project customers demand ever better project results.