Book Review

Question:

You’ve been reading about risk concepts and the risk management plan (ebook, chapter 7), primarily, at this point. Based on what you’ve read, your experience in risk management, and any other resources you care to utilize, discuss the following questions. 
1. Why is project risk management so important in today’s business environment?
2. How does risk management relate to or integrate with project/program management?
Cite your sources in this discussion!

Read the ebook, and do the online researches, then answer the above questions. The ebook should be one of the citations and references.

Answer:

Project Management

Project risk management entails identification, analysis and corresponding mitigation of the anticipated risks that could otherwise bring about financial losses in an investment. Financial losses arise when both anticipated and expected risks become a reality (Pinto, 2007). In addition to this, factors such as prevailing market interest rates, poor economic conditions and stiff competition may put the organization at risk (Wanner, 2013). Consequently, risk management entails techniques such as risk avoidance, retention and transfer (Larson & Gray, 2011). According to Wanner (2013), risk avoidance is quite tedious and involving in that it requires changing the dynamics of a project completely to eradicate the risk. On the other hand, risk transfer is done through insurance whereas retention involves budgeting for the risk within the organization.

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In light of this, the primary aim of project risk management is to safeguard projects and investment portfolios from incurring negative returns on investment (ROI) by identifying the possible risks and formulating effective plans to manage them (Wanner, 2013). This implies that for risk management to be effective, it should be conducted from the onset of the investment project. Furthermore, project risk management increases both the chances of successfully completing a project that is currently in progress and the logic of accountability in a business (Larson & Gray, 2011). When these benefits are accrued in the project, this implies that the returns realized from the investment project may increase substantially (Pinto, 2007).

Evidently, risk management and project management are intertwined in the sense that they both go hand in hand. This is portrayed through the observation that an effective and sound risk management plan ultimately symbolizes the success of a project (Wanner, 2013). According to Wanner (2013), risk management affects nearly all the phases of a project including organizations’ responses to budgetary constraints, the scope of project operations, and the involvement of all stakeholders. As such, this process should be prioritized at the onset of the project and prompt measures put in place to prevent risks from becoming a reality.

References

Larson, E. & Gray, C. (2011). Project management: The managerial process, fifth edition. McGraw-Hill Irwin.

Pinto, J. (2007). Project management:Achieving competitive advantage. Upper Saddle River, NJ: Pearson.

Wanner, R. (2013). Project risk management: The most important methods and tools for successful projects. New York, NY: CreateSpace Independent Publishing Platform.

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