Risk and uncertainty go hand in hand and as organizations try to pursue opportunities, the element of risk involved also escalates. The magnitude of risk varies from one project to another. The underlying wisdom is that project risk management is all about estimation of the risk involved based on the likelihood of future project uncertainties that may arise during the course of the project.
During the last few decades, the business environment has undergone rapid changes. As a result, a majority of organizations were forced to achieve significantly higher growth rates. With increasing emphasis being placed on growth, by both organizations and their stakeholders, organizations are pursuing different opportunities in an aggressive manner. Risk and opportunity go hand in hand and as organizations try to pursue opportunities, the element of risk involved is also escalating. Risk is particularly high in those areas where organizations are trying to improve current capabilities and achieve something that others have not done earlier. The element of uncertainty or risk has become especially high in the wake of rapid technological advancements and changes in business environment. However, the opportunity to advancement cannot be realized without taking risk.
Traditionally, risk was viewed as a negative consequence or output and characterized as a threat to growth, and sometimes a threat to survival. Risk, in the simplest form, can be defined as uncertainty of the future. Many organizations have failed miserably to meet the growth expectations of their stakeholders owing to poor anticipation of future events. While in the project planning phase, it is common to believe that everything will go according to plan. However, owing to the dynamic nature of the environment in which the organizations are operating now, things rarely go according to plan. Failure to anticipate future events can lead to surprises and organizations can fall prey to them, thereby undermining future potential growth and survival. |
