Introduction

Project risk management is an essential part of project management, aimed at improving project performance via systematic identification, appraisal, and management of project-related risk. This aim, improving performance, implies a wide perspective that seeks to manage both threats, which if they occur have a negative effect on project performance, and opportunities, which if they occur have a positive effect on project performance (Project Management Institute 2000, 127; Simon, Hillson, and Newland 1997). In practice, the emphasis is often on managing threats or "down-side" risk. This emphasis might reflect a difficulty in throwing off the commonly understood meaning of "risk" or an underlying view that it is more important to manage threats than opportunities. A focus on threat management is reasonable, and very useful in the face of a general tendency to set challenging objectives. If a "tight" budget for a project is set, then by definition this implies a preponderance of threats to keeping to budget rather than opportunities for coming in below budget. Nevertheless, if the potential for opportunities is never explored, opportunities will not be discovered and exploited.

The importance of project opportunity management in project risk management has been understood for some time, and interest in project opportunity management has been growing steadily. For example, the approach to project risk management adopted worldwide by British Petroleum (BP) International in the mid-1970s (Chapman 1979) was built around the concept of risk efficiency (a...