The importance of project risk management shouldn’t be taken lightly. More than 50% of organizational projects fail due to ignored or poor risk management procedures, while over 85% delay because project risks were not prioritized. Therefore, project managers should explore the various types of risks and their impact on project success.
Businesses, regardless of the niche, face risks that can affect their financial security and lead to bankruptcy and business closure. However, proper project risk management ensures that business risks and challenges are contained. Identifying project risks and mitigation measures early increases the chances of project success.
What is Risk Management?
Risk management is a business practice that helps project managers identify, evaluate, monitor, and improve risk mitigation processes. Businesses of all sizes should embrace risk management efforts. Unfortunately, small businesses informalize risk management, while large enterprises codify.
Managing business risks is important for the business’s stability while it grows. Running your business blindly without proper risk identification can lead to significant losses. For instance, small businesses that operate without knowledge of competitive risks can lose their market share. Ignoring safety risks can lead to workplace accidents and lawsuits while ignoring financial risks leads to financial losses.
That said, businesses should have dedicated project risk management resources. Most established enterprises have an entire department, while small businesses may have a small team headed by a risk manager. Generally, both teams focus on identifying business risks, assessing their extent, and preparing a mitigation strategy to avoid consequences.
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