Introduction

Risk refers to future conditions or circumstances that exist outside of the control of the project team that will have an adverse impact on the project if they occur. A current problem is an issue that requires attention immediately, while a risk is a potential future problem that has not yet occurred.

Successful projects ^[1] occur when the team attempts to resolve potential problems before they occur. This is the art of risk management. A reactive project manager tries to resolve issues when they occur. A proactive project manager tries to resolve potential problems before they occur. Not all issues can be seen ahead of time, and some potential problems that seem unlikely to occur may in fact occur.

However, many problems can be seen ahead of time. Risk management is a proactive process that is invoked to attempt to eliminate these potential problems before they occur, and therefore increase the likelihood of success on the project.

There is a concept of opportunity risk or positive risk. In these instances, the project manager or project team may introduce risk, to try to gain much more value later. For instance, the team members may spend time to relocate together because they think the close collaboration will result in productivity savings over the life of the project. This is an example of intelligent risk taking. However, in this step, it is assumed that the risks we are managing are negative risks. They need to be addressed so that the underlying...