Project Management Guide

Risk management approach should be to prevent negative risks and enhancing positive risks. This approach is recomended by PMI (Project Management Institute). Based on this approach, below are some key principles of risk management:

• Risk categories are important in classifying risk.
• Risk management planning and risk response planning are not the same activities.
• Risk can be either positive or negative. Positive risks are opportunities, negative risks are threats.
• A risk breakdown structure is used to organize risk in a hierarchical structure.
• Probability and impact are both needed to assess risks.
• Quantitative analysis is generally reserved for high-probability, highimpact risk.
• Risk identification is an iterative process that is performed throughout the project, not just during planning.
• Decision tree analysis is a technique using probabilities and costs for structured decision making.
• Monte Carlo analysis is a technique using simulations and probability in determining quantitative risk analysis.