Project risk management is an important aspect of project management.
According to the Project Management Institute’s PMBOK, Risk management is one of the ten knowledge areas in which a project manager must be competent. Project risk is defined by PMI as, “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project‘s objectives.
A risk is a future event that may or may not happen, but if it does occur it will have an effect on project scope, schedule, budget, or quality. It may have one or more causes and, if it occurs, it may have one or more impacts.
All project activities carry some element of risk, which are uncertainties about them that could affect the project for better or worse. It is important to understand the difference between business risks and project risks. What a project manager needs to know is what is the likelihood a risk will occur and if it does what it will impact as this affects the project plan.