(7.0.P1)

Risk refers to future conditions or circumstances that exist outside of the control of the project team that will have an adverse impact on the project if they occur. Whereas an issue is a current problem that must be dealt with, a risk is a potential future problem that has not yet occurred.

A reactive project manager tries to resolve issues when they occur. A proactive project manager tries to resolve potential problems before they occur. This is the art of risk management.

Not all issues can be seen ahead of time and some potential problem that seems unlikely to occur, may in fact occur. However, many problems can be seen ahead of time and they should be managed through a proactive risk management process.

Everything in life has some degree of risk. Walking across the street can be risky. Your projects have risks as well. The project manager should perform a risk assessment with the project team and the client to identify high, medium and low level risks. If you are lucky, you may find that you only have low risks. However, this assessment will alert the client and the project team to any medium and high-level risks that may cause future problems.

Identifying risks on your project is not necessarily bad, since it is a feature common to all projects. All projects have some degree of uncertainty due to the assumptions associated with them and the environment in which they are executed. Projects with a higher level of risk require more rigorous risk management and more management focus. Although not all risks can be eliminated entirely, most can be anticipated and managed ahead of time.

The purpose of risk management is to identify the risk events for a project and then establish a Risk Management Plan to minimize the probability that the risk event will harm the project. The objective of risk management is to eliminate the risk event before it occurs or to minimize the impact of the risk if it does occur. 

In the TenStep process, I first time you perform a risk evaluation is in the 1.0 Define the Work step. Additional risk identification should occur throughout the project on a scheduled basis (monthly or quarterly) or at the completion of a major milestone.