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Risk management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives. Figure 11–1 provides an overview of the following major processes:

	Risk Management Planning — deciding how to approach and plan the risk management activities for a project.
	Risk Identification — determining which risks might affect the project and documenting the characteristics.
	Qualitative Risk Analysis — performing a qualitative analysis of risks and conditions to prioritize their effects on project objectives.
	Quantitative Risk Analysis — measuring the probability and consequences of risks and estimating their implications for project objectives.
	Risk Response Planning — developing procedures and techniques to enhance opportunities and reduce threats to the project`s objetives.
	Risk Monitoring and Control — monitoring residual risks, identifying new risks, executing risk reduction plans, and evaluating their effectiveness throughout the project life cycle.

  These processes interact with each other and with the processes in the other knowledge areas. Each process generally occurs at least once in every project.
  Although processes are presented here as discrete elements with well-defined interfaces, in practice they may overlap and interact in ways not detailed here. Process interactions are discussed in detail in Chapter 3.
  Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective. A risk has a cause and, if it occurs, a consequence. For example, a cause may be requiring a permit or having limited personnel assigned to the project. The risk event is that the permit may take longer than planned, or the personnel may not be adequate for the task. If either of these uncertain events occur, there will be a consequence on the project cost, schedule, or quality. Risk conditions could include aspects of the project environment that may contribute to project risk such as poor project managment practices, or dependency on external participants that cannot be controlled.
  Project risk includes both threats to the project`s objectives and opportunities to improve on those objectives. It has its origins in the uncertainty that is present in all projects. Known risks are those that have been identified and analyzed, and it may be possible to plan for them. Unknown risks cannot be managed, although project managers may address them by applying a general contigency based on past experience with similar projects.
  Organizations perceive risk as it relates to threats to project sucess. Risk that are threats to the project may be accepted if they are in balance with the reward that may be gained by taking the risk. For example, adopting a fast-track schedule that may be overrun is a risk taken to achieve an earlier completion date. Risks that are opportunities may be pursued to benefit the project`s objectives.
  To be successful, the organization must be committed to addressing risk management throughout the project. One measure of the organiztional commitment is its dedication to gathering high-quality data on project risks and their characteristics.