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in solving the issue. Spending overruns are often outside the project manager’s control,

but you’ll need documentation and budget reports when you talk with the sponsor.

Risk Planning

Risk is something that we deal with in our everyday lives. Some people seek out jobs or

leisure activities that are considered high risk. They may get a thrill or a feeling of great
accomplishment from taking on the challenge of skydiving or mountain climbing or
from working as a lineman on high-voltage electrical lines.

A risk is a potential future event that can have either negative or positive impacts on
the project. However, if you mention the word risk in association with a project, the
majority of people will immediately think of something negative. In my experience, the
vast majority of the time that a risk event occurs, it has negative consequences. But

risks are not always negative. There is the potential for positive consequences as a
result of a risk occurrence.

Risk planning deals with how you manage the areas of uncertainty in your project.
There are three major components to risk planning: identifying the potential risks to
your project, analyzing the potential impact of each risk, and developing an
appropriate response for those risks with the greatest probability and impact. Let’s
take a look at each of these next.

Risk Identification

All projects have risks. Risk identification is the process of determining and
documenting the potential risks that could occur on your project.

You can view risks both by looking at the project as a whole and by analyzing
individual components of the project such as resources, schedule, costs, tasks, and so
on. Risks can include such items as the level of funding committed to the project, the
overall experience level of the core project team, the use of project management

practices, or the strategic significance of the project. Risks may also be associated with
particular phases of the project or with certain key tasks.

You should include stakeholders, core team members, and any other subject-matter
experts who may have experience or knowledge of this project in your risk
identification and analysis process. You can use several techniques to help define the
initial risk list, including brainstorming, interviews, and facilitated workshops.

One way to get a jump start on a brainstorming session is to review a list of common
potential risks:

Budgets or funding

Schedules

Scope

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