What is Risk Management?
Risk management is an essential activity of project management. It is important to classify risks into appropriate categories. Risks can be classified into following 13 categories:
- Operational Risk: Risks of loss due to improper process implementation, failed system or some external events risks. Examples can be Failure to address priority conflicts, Insufficient resources or No proper subject training etc.
- Schedule Risk: Project schedule get slip when project tasks and schedule release risks are not addressed properly. Schedule risks mainly affect on project and finally on company economy and may lead to project failure.
- Budget Risk: Wrong budget estimation or Project scope expansion leads to Budget / Cost Risk. This risk may lead to either a delay in the delivery of the project or sometimes even an incomplete closure of the project.
- Business Risk: Non-availability of contracts or purchase order at the start of the project or delay in receiving proper inputs from the customer or business analyst may lead to business risks.
- Technical Environment Risk: These are the risks related to the environment under which both the client and the customer work. For example, constantly changing development or production or testing environment can lead to this risk.
- Information Security Risk: The risks related to the security of information like confidentiality or integrity of customer’s personal / business data. The Access rights / privileges failure will lead to leakage of confidential data.
- Programmatic Risks: The external risks beyond the operational limits. These are outside the control of the program. These external events can be Running out of fund or Changing customer product strategy and priority or Government rule changes etc.
- Infrastructure Risk: Improper planning of infrastructure / resources may lead to risks related to slow network connectivity or complete failure of connectivity at both the client and the customer sites. So, it is important to do proper planning of infrastructure for the efficient development of a project.
- Quality and Process Risk:This risk occurs due to
- Incorrect application of process tailoring and deviation guidelines.
- New employees allocated to the project not trained in the quality processes and procedures adopted by the organization.
- Resource Risk: This risk depends on factors like schedule, staff, budget and facilities. Improper management of any of these factors leads to resource risk.
- Supplier Risk: This type of risk may occurs when some third party supplier is involved in the development of the project. This risk occurs due to the uncertain or inadequate capability of supplier.
- Technology Risk: It is related to the complete change in technology or introduction of a new technology.
- Technical and Architectural Risk: These types of risks generally generally leads to failure of functionality and performance. It addresses the hardware and software tools & supporting equipments used in the project. The risk for this category may be due to — Capacity, Suitability, Usability, Familiarity, Reliability, System Support and deliverability.