Discuss the risk management process and its interactions with the project lifecycle - Essay Example

Risk management is a process that leads to identification of the uncertainties that may arise in the future and provide remedies and precautions for handling these risks. Risks faced by an organisation may create a negative impact on its assets and the reputation it has gained. The aim of Risk management is to identify the potential risks that the company might face and develop resources for mitigating the adverse effects of such losses. An organisation may face various types of risks like financial risks, operational risks, perimeter risks and lastly strategic risks.

Financial risks may result in the losses related to cost of claims and liability of judgments (Conrow 2003). Operational risks may be faced by the organisation in the form of labor strikes and strategic risks involve risks related to changes in management or loss of reputation. Risk management has a pivotal role to play in effective project management. The following paper, will throw light on crucial objectives of risk management, the process of risk management and interactions between risk management the project lifecycle.

Objectives of Risk Management The process of risk management aims at identification of the potentially hazardous and harmful situations. . The purpose of risk management is to develop strategies and plans for managing and mitigating the potential risks faced by the organisation. In this manner, risk management aims at preventing the organisations from various types of risks that it may face in the long run and provide effective tools for setting appropriate strategies. Risk Management Process Assessment of risks has a fundamental process that involves five steps in implementing an appropriate system of control so that risks can be minimised.

It helps in the identification and analysis of the various risks that are harmful for the workplace and negatively impact the organisation. Therefore, risk assessment is a straightforward examination of the dangerous elements that can harm the people, as well as the reputation of the organisation in the long run. So there is a need to take proper precautions for eliminating all kind of risks in order to minimise the fuss that is created in the functioning of the organisation (Culp 2001). The first step of risk management process involves identification of hazards and the harmful effects that these hazards possess.

For this purpose, it is necessary to identify how people would be affected by the potential danger that is created by the risks. It is required that proper ramifications are undertaken for mitigating the possibilities of such risks. Various strategies and tools are identified to be crucial, for mitigating the dangerous effects of the risks. At this level, sources through which risks can be avoided are analysed, and appropriate measures are undertaken to keep the things at place. These sources of risks can be internal or external to the organisation.

An example of internal and external sources of risks can be the employees and the operational