What is Risk in Project Management?
Risk is any unexpected event that can affect your project — for better or for worse. Risk can affect anything: people, processes, technology, and resources. An important distinction to remember is that risks are not the same as issues. Issues are things you know you’ll have to deal with, and may even have an idea of when they’ll occur, like a team member’s scheduled vacation, or a big spike in product demand around the holidays. Risks are events that might happen, and you may not be able to tell when — such as flu season hitting your team all at once, or a key product component being on backorder.
When determining what is a risk in project management, consider these five elements:
- Risk event: What might happen to affect your project?
- Risk timeframe: When is it likely to happen?
- Probability: What’s are the chances of it happening?
- Impact: What’s the expected outcome?
- Factors: What events might forewarn or trigger the risk event?
Prepare a risk assessment to get a better understanding of the kinds of risks your project is facing and their possible consequences. If you want to learn how to manage risks in a project, read this article on how to create a risk management plan.