Project manager has the responsibility to manage the potential risks that will affect the product or the progress of the project. In simple words, risk is any activity or event that you will never want to happen. Risk may be threaten the overall business of the organization or the specific product that is under development process. Risk may be affect the quality of the product being developed, project schedule. Project manager has the major responsibility to take action to avoid these risk.
Classifications of the Risk:
- Project Risks: Project risks are those that will directly affect the project performance i.e. affect the time frame of the project or increase the cost of the project or loss of the major resources of the project. For example, during the development of the project, the developer of the application is to leave the organization, is directly affect the performance of the project, because to find an experienced developer is a time taking task, that will cause the delay of the project.
- Product Risk: Another major risk that will affect the product quality or performance of the application. For example, If we are acquiring a component for our project is failed to performed efficiently or as we are expecting to perform, that will affect the overall performance of the system, so this is the major risk for the product.
- Business Risk: Business risk is directly affect the business for which the product is developing. For example, if the competitor of the organization launched the same nature product, that will nullify the competitive advantage in the market.
Stages of Risk Management:
- Risk Identification: Project manager has the prime responsibility to identify and prioritize the possible project risk, project risk and business risk that will affect the project and business.
- Risk Analysis: Project Manager has to analyze the risk consequences and likelihood.
- Risk Planning: Project manager has to develop plans to address the risk either project risk, business or product risk. Manager has two different options regarding the risk, either avoiding it or minimize the effect of the potential risk.
- Risk Monitoring: Project manager has to assess the risk on regular basis and manager also develop the plans for the risk mitigation.