Running head: CATEGORIZING RISKS

MGMT 613 Assessing and Managing Project Risk

Activity 3.5 Categorizing risk
Arcenio M. Muniz
August 30, 2015
Embry-Riddle Aeronautical University

CATEGORIZING RISK

Activity 3.5 Categorizing risk

Risks are inherent in every project. The practice of risk management attempts to
recognize and manage potential trouble areas that can occur once the project is implemented.
The cost impact of a risk event in the project is less if the event occurs earlier rather than
later. The early stages of the project represent the period when the opportunity for
minimizing the impact or working around a potential risks exists. Conversely, as the
project passes the halfway implementation mark, the cost of a risk event occurring
increases rapidly (Larson & Gray, 2014).
Attempting to manage risk before the project begins is a more valid approach then not
attempting to manage the risk. Opportunity and risk remain at a relatively high level at the
project planning stage but due to the low investment at this point the amount at stake remains
low. Incorporating risk management into this stage will ensure that critical performance,
schedule and life cycle cost risks are addressed, with mitigating actions incorporated into the
program planning and budget estimations. Incorporating mitigating actions into the projects
planning phase will drastically increase the chance of project success as well as ensure budget
estimations remain as accurate as possible. What will result from the planning phase with good
risk management is an organized, comprehensive and iterative approach for managing root
causes. The ultimate benefactor of a project that maintains early risk identification and
categorizations is the organization that is sponsoring the project. The organization will see much
high project success rates and likely a positive benefit to their bottom line.

CATEGORIZING RISK

References
Larson, E. W. & Gray, C. F. (2014). Project management: The managerial process (6th ed.). New
York, NY: McGraw-Hill.