Project Risk Management
What you must know
Risk management is the process of identifying, analyzing, planning for, and monitoring uncertainties that could affect scope, schedule, cost, or quality. Candidates must know the risk management process: identify → analyze (qualitative and quantitative) → plan responses → monitor. Understand probability × impact scoring, risk register, positive risks (opportunities) vs. negative risks (threats), and the response strategies: for threats - avoid, transfer, mitigate, accept; for opportunities - exploit, share, enhance, accept. Know contingency (for identified risks) vs. management reserve (for unidentified).
Traps in questions
- Calling insurance mitigation when it is actually transfer.
- Treating acceptance as doing nothing - active acceptance includes a contingency plan.
- Forgetting that risk includes upside (opportunities), not just threats.
- Confusing contingency (known-unknowns, in the budget) with management reserve (unknown-unknowns, above the project).
- Assuming the highest-probability risk is the highest priority - score is probability × impact.
Worked rule of thumb
Score risks as P × I on a 1–5 scale. Risk A: P=4, I=5 → 20. Risk B: P=5, I=2 → 10. Risk A ranks higher despite lower probability. Then choose a response: if a client-caused delay is likely and costly, transfer via contract terms or mitigate with schedule float; if low impact and low probability, accept with a contingency.
Key habit: every risk in the register should have an owner, a response, and a trigger - questions often test which is missing.