1. Introduction
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Project risk management as the management which includes all the processes that involved in risk identification, regulation, and mitigation on a project. The objective of the risk management is to increase the likelihood of positive risks and decrease the likelihood of negative risks. Some key concepts for this knowledge area are uncertainty, risk factors that should determine what impact and amount at stake, expected time as when in in the project life cycle and how often the anticipated frequency of risk event from the source, risk adverse, tolerance, threshold and appetite. The role of project manager in risk management is to monitor and control the various aspects of the project, to look for deviations from the trend and react early and to keep stakeholders informed about the project progress. There are six processes within this knowledge area, and they are Plan risk management, identify risks, perform qualitative risk analysis, perform quantitative risk analysis, plan risk responses, and implement risk responses PMBOK (2017) 6 edition.
Identify, Evaluate, & Prioritize are the three components that falls on the Risk management. Risk management is the process where risk is identified, evaluated, and prioritized with the mindset of reducing risks in a project. The process in which one identify, evaluate, and prioritize any risks identifies with the outlook of reducing any impact in the project is risk management. According to (Cooper, Grey, Raymond, and identifying, evaluating, and prioritizing risk will help any project manager to manage every risk that is considered critical or important. So, to mitigate risks successfully, the risks must be prioritized based on overall effect on the project. Recognize, prioritize and control are the major key to reduce the impact of any risk to the project. The first one is Risk prevention which focuses on eliminating the possibility of the risks to happen. Risk may be prevented by reviewing operations, approaching alternatives, processing change, and preventing maintenance. The other strategies to manage risk is Risk Mitigation which is developed to minimize the impact of a risk in case to gets to happen. The third strategy to manage risk is by sharing risk that involves sharing a cost of possible risk during a project.
2. Objectives
· To understand the importance of Risk Management in today's world
· To identify the theoretical and methodological contribution to Risk Management
· To find out the gap between the understanding of scholars then and now
3. Problem Statement
· Limited literature review on Risk management
· Difficult to find out the facts and figures
4. Research Methodologies
A secondary source of data has been used to collect information where the information on this research topic has been collected from different articles, books, journals, and the internet.
5. Literature Review
The process of determining the potential risk and their characteristics so that any action can be taken to prevent any damage to achieve the goals and objectives of the project is known as risk identification. As there are multiple sources of risk, a project manager needs to review the project scope, cost, plan, stakeholder expectations and so on to identify the risk. The purpose of the risk identification is to ensure all the potential risk and to deal with the strategies to minimize the risk. Hence, Alter, S. (1979), Risk refers to the probability of the negative occurrence due to the internal or the external factors. By analyzing the risk, the return of the investment can be calculated. Internal and external factors are responsible to converge risk. Internal factors bring strength and opportunities in an organization and can be controlled by the management whereas external factors bring weakness and threat in an organization and it is uncontrollable. Various preemptive actions need to be taken by the project manager to mitigate risk created by the external factor.
The primary step of risk assessment involves risk identification, risk analysis and risk prioritization. Any risk that affects the project can compromise a project's success. Risk identification determines the risk that may bring barrier for the achievement of the goals and objectives of the project. Depending upon the nature and size of the project various tools and techniques are used to identify the risk. Risk analysis assess the loss probability for the risk that is identified. Performance model, cost models, network analysis, quality factor and statistical decision making are the typical techniques for the risk analysis. The process of ordering the rank of the risk that has been identified and analyzed is known as risk prioritization (Boehm, B. W. 1991).
Risk evaluation is the process of defining how much risk will affect the project activities. There are certain steps that are needed to be followed to evaluate the risk which might hamper the project. First the risk should be identified, and the impact of each identified risk should be estimated. The various conditions due to which the risk has arisen should be listed and various treatment options should be gathered. Regularly the risk treatment options should be implemented, and the result should be evaluated. In addition to this, Schmidt, R., Lyytinen, K., Keil, M., & Cule, P. (2001), stated that there are two stages in risk management. The first stage is risk assessment. In this stage the various risk factors are identified; the impact of the risk is estimated along with the hamper that the risk might create in the project and total risk exposure is evaluated. The second stage is taking the action to control the risk. In this stage various preemptive actions are carried out to mitigate the risk associated with the project. The scholars further explain that there need to be a very good mechanism to help project manager to identify the risk. There are several methods of identifying the risk like scenarios, checklist, examination of past, brainstorming, and other innovative methods. Further, Wallace, L., & Keil, M. (2004): Risk are the factors which can adversely affect the project if the project manager does not take appropriate steps to mitigate the risk. For risk management strategies various firms has incorporated checklist method. This method helps to categorize by providing insight into the relationship among the risk and the outcome of the project. The researchers explored the result of use of checklist in multi industry study for more than 500 software development projects. The study concluded that to shape the process and the product outcome the project execution matters more than any type of the risk.
However, Huang, S. M., Chang, I. C., Li, S. H., & Lin, M. T. (2004),says that management pressure from the customers, competitors and suppliers are being faced by the project due to the rapid expansion of the e-commerce. The major risk factors associated with the project needs to be found out. The estimated framework for the project should be identified and the existing risk should be verified to prevent the impact of risk of project pre-implementation. In order to come to the conclusion, the researchers have taken some steps towards the addressing the framework of risk assessment. First, they employed the Delphi method to acquire the risk factor associated with the project and secondly, they established framework to assess and prioritized those factors. Implementing risk management refers to the process of involving the practices and principles of risk management in the project life.
When the risk is identified too many numbers of risk will appear which have the same ranking. When the number of risks is high then it should be clustered at one level so that the risk can be prioritized and the one which is needed to be mitigated first can be given high preference and resources too. Teller, J., Kock, A., & Gemünden, H. G. (2014) points out that the aim of project risk management is to reduce the rate of the project failure. The risk management pattern of the individual project risk and the project portfolios is different. For the management of risk in project portfolios researchers suggest adopting a perspective which is higher than the individual risk. The researchers took the sample of 177 project portfolio where the hierarchical multiple regression analysis was carried out. The study concluded that the project level risk management and portfolio level integration of risk information are associated with the success of project portfolio. In every project level risk management is essential however, the integration of risk information is essential with high levels of portfolio dynamics.
According to Maytorena, E., Winch, G. M., Freeman, J., & Kiely, T. (2007): As the size and the complexity in the project is grown the interest in the risk management is increasing. Due to this various practices, guides, tools, and techniques have been developed by focusing on risk management. The most important phase of the risk management is risk identification and risk evaluation. To improve the overall performance of the project the risk should be identified and evaluated. Unless the risk is identified it cannot be measured. The process of risk identification is: Determine the possible risk and classify the risk. After the classification of risk it should be analyzed. When the risk is analyzed the impact of each risk is evaluated. As per the level of risk it should be prioritized, and the risk is monitored timely on regular basis.
Explaining more about the risk management Jafari, M., Rezaeenour, J., Mazdeh, M. M., & Hooshmandi, A. (2011), explains that Risk is the situation which influence the cost, quality and time of the project. To manage the risk six steps are to be followed:
· Planning: It is the process of outlining and determining activities to run the project effeciently. A planning needs to be done to guide what and how to do the project related activities. Proactive plan should be made so that it can be taken if any environmental forces affects the project related work.
· Risk identification: Risk should be determined which might affect the project goals and objectives. All the external and internal sources of the environment should be analyzed to determine the risk associated with the project.
· Qualitative analysis: All the risk that are identified are not of the same nature and does not affect the project in the same level. On the basis of the level of risk, it should be analyzed. The risk should be ranked in systematic order so that the high risk factor can be allocated big amount of resources and it can be mitigated fast to stop it from affecting the project.
· Quantitative analysis: In qualitative analysis the risk is examined and the effect of the risk is calculated. Each risk is evaluated and the project outcome due to all the risk is calculated. The effect of the risk in each project goals is examined.
· Response to risk: Response to risk is the way of taking the actions in order to mitigate the risk and decrease threat to the project. Risk should be responded quickly otherwise it will create devastating effect in the project activities.
· Monitoring and control: Monitoring is essential because it helps to minimize the existing risk and helps to mitigate the risk which might occur in future. The continuous monitoring helps to take the action quickly which helps to eradicate the risk associated with the project.
7. Conclusion
This research has contributed to the Risk Management literature by examining the benefits of managing risk in the organization for the effectiveness of the project. The range of risk within investments is a dense process of study, analysis and statistics, as mentioned in the text, there are many tools that exist to provide us with the idea or guidance on how to assess risk situations, there is a margin considerable openness and uncertainty in investments that may or may not be unleashed in a failed attempt or a total failure, for this reason the most propitious thing is that in the lead up to finalizing a contract or venturing into a considerable investment, every detail that generates a certain imbalance and pose a productivity threat in this way you can work towards making weaknesses a key point for development and success.
Taking into account all the processes and risk assessments, I consider that everything is set to close business deals destined for success, also evaluating work customs and routines favors executive relationships and work performance to be under harmony and consensus and does not exist differences due to the already marked customs or cultural parameters of certain specific regions, so that if the group associated and responsible for the project is well oriented and carrying out the studies, analysis, data and information gathering, as well as integration and respect for the new work areas the final result will surely be achieved by success and effectiveness at its best.
Recommendation
It is essential to focus on strengthening the knowledge of the agile and give emphasis on identifying the critical issues on the risk management. If there is risk in a project it should be managed, if not managed properly on time, it may lead the project to collapse. The working environment may also be an obstacle for the team thus, the risk should be mitigated and solved. All the project members should be highly committed to their work and should work in team to grab the opportunities and solve the problems. The project team should work in such a way that they should be able to identify risk, prioritize the risk and analyze it on time.
In nutshell, we can say that there are so many risk prevailed in a project and it may create challenges in a project and if appropriate action can be taken those challenges can easily overcome into an opportunities which can be the major strength of an organization.
8. Limitation and future study:
The limitation of the research is that the researcher did not visit any current industry where there was risk in a project and how was it mitigated. In future the researcher needs to research a project that needs to imply risk management for the betterment of the company and will focus how the risk was solved by the project manager and the team. The researcher will also point on the things that were a risk in a project.