What is Risk Management and Why is it Important?

Risk Management is a combined and continuous process of decision analysis and proactive management. It identifies and quantifies opportunities and threats. There are four phases of Risk Management that every project manager should follow:

  1. Identify Risks – Review baseline cost, and assess baseline cost and schedule risks
  2. Analyze Risks – Assess and quantify risks as it relates to project cost and schedule
  3. Plan Risk Responses – Develop response strategies to management risks and quantify impacts based on project cost and schedule
  4. Monitor/Control Risks – Be proactive versus reactive

Now you should have a better understanding of what Risk Management is. Let’s explore the importance of Risk Management. It is quite simple, if project/program risks are not formally identified, analyzed, and monitored/controlled there is great probability that the project/program scope, schedule, and/or budget may eventually be in jeopardy. Project managers have a lot to worry about when managing a project/program so why not stay in front of the curve and be proactive in managing risks? The benefits outweigh the costs every time. There are many Risk Management tools available that can help you execute the four Risk Management phases. Remember these tools are not finite – they are decision tools.

At West Monroe Partners, our creative, talented project leaders will help you define a clear course of action that takes you confidently from defining project goals through realizing project success. For more information on West Monroe Partners, visit our firm’s website. For more information on our Energy & Utilities practice, visit our practice’s website.

Phone: 312-602-4000
Email: marketing@westmonroepartners.com
222 W. Adams
Chicago, IL 60606
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