The Concept of Risk in Different Project Management Approaches Essay

The Concept of Risk in Different Project Management Approaches - Essay Example This is because they are uncertain and may depend on external factors beyond the scope of the project. Being aware of the risks involved in a project enables the manager to plan, minimize, avoid, cope or adjust with the possible risks. Risks are capable of hindering the projects objectives from being realized. Risk management is important and there are different methodologies which are applied in project management to minimize the negative outcomes (Hubbard2009, p. 35). Some of the methodologies include Prince 2 and SCRUM. Prince 2 is a highly controlled project which ensures that certain standards are followed to achieve specified standards or quality. SCRUM is an agile methodology which develops software. It is applied to development of new products with defined roles and methods. Comparing Prince 2 and SCRUM will help identify the strengths and weaknesses of the traditional approached to the use of software in risk management. 2. The Concept of Risk Management Crouhy   et al (20 00) mention that project management is viewed as the exercise conducted before and during the project management which identifies the uncertainties and constrains. The identification enables project managers to remove constrains and purge out uncertainties. Getting rid of uncertainties and constrain completely is challenging. The mangers can reduce constrains and uncertainties and manage the remaining level of risk. Risk management is process that involves analyzing and recognizing uncertain possibility (positive and negative), utilizing available resources to minimize, control and assess the effects of uncertain occurrences. Risks management is also considered as a means of maximizing on the opportunities. Risks in project management emanate from natural cause or tragedy, legal liabilities, credit management, changes in financial market, inappropriate project design, lack of developments, lack of sustainability and attacks from adversaries. Various institutions have been establishe d to set standards that assist in risk management. They include the ISO standards and the Project Management Institute. The institutions vary depending on the industries they can be applied. The approach, conceptualization and motives are depended on the specific industry a project falls (Hopkin 2012) According to Mulcahy (2010) risks management is also considered a part of project management that spots risks, implement procedures and develop contingency plans. Risk management is considered as a tool that eliminates, minimizes or transforms risks to allow the realization of goals and objectives of the project. Common risks include: lack of understanding of the project, assumptions in the project, reliance on practices articulated by other teams, lack of training for employee and poor decision making (Crouhy  et al 2001). Different project management handles risks by transferring the risk, minimizing the occurrence of the risk, minimizing the impacts, evading the risk and accepting the consequences in some instances. This paper will adopt risk management as means of reducing and coping with risks during a project. 3. The concept of Risk in Prince 2 Prince 2 denotes Projects in Controlled Environment 2. Prince is widely used in the United Kingdom for public and private projects. It is highly structured and standardized to meet management needs, enforce control and provide organization. Prince 2 entails training for managers and provides certification. Prince 2 methodologies relies on: justification of the business, clarity of functions,