ABSTRACT
Classification of risks can be done in a number of ways depending on the view of the situation that is required; with a complex project a hierarchical structure could be appropriate. Projects have gone seriously wrong when contracting arrangements between sponsors and contractors are not attuned to the risks and uncertainties that are inherent in the project and one party is expected to shoulder an unequal portion of the risk. The desire to reduce risk as far as possible can lead to distorted judgement as can the desire to win in a competitive situation. It can result in a project that starts from a bad business deal and neither side tends to come out well from that. The process of formal risk analysis and management within projects is a relatively recent invention. Prior to the early 1980s it was hardly mentioned within project management circles and no clearly recognizable processes were apparent.
