Risks are part of any project that you are dealing with. There are different types of project risks in project management that business owners should be aware of. A successful project can be attained if a person follows a risk management plan. The entire team is needed to avoid all the common types of risks in project management. This article covers 10 categories of risk in project management.
1. Strategic Risk
The mistakes made while devising and implementing strategies for the company, like choosing a specific software that doesn’t work well for the company, falls under strategic risk.
2. Legal Risk
This risk is mostly unpredictable and can be generated through regulatory and legal duties. Internal legal issues of the company are also part of legal risks.
3. Operational Risk
Operational risks arise from within the planning phase and the company’s sales process. It is directly linked with poor performance because the outcome is not the same as the project managers have planned it.
4. Performance Risk
Performance risk is a type of risk in which the desired outcomes don’t come as planned by the project managers. The whole team is involved in this type of risk. Performance risk leads to cost and schedule risks when the duration and cost of the projected increase.
5. Cost Risk
Cost risk is a common risk that results in poor planning and inaccurate cost estimation. The risk gets higher when the demand of the client increases.
6. Schedule Risk
The scheduled time increases of the project than the planned time. The schedule risk increases the costs and slows down the benefits of the project.
7. Governance Risk
Governance risk is linked with the administration section of the company. Governance risk is about the company’s ethics, regulations, and reputation that is directly linked with project sponsors and stakeholders.
8. Market Risk
Market risk is unpredictable, including interest rate risk, market trend, and market competition. Proper planning and market knowledge are needed to avoid market risk.
9. Resource Risk
The lack of resources or the unavailability of resources can badly affect the time and project cost. Extra time may be needed in case of a lack of resources.
10. External Risk
External risks are related to natural hazards like storms, earthquakes, floods, etc. Other external sources can be civil unrest and labor strikes. All such happening can directly affect the cost and schedule of the project.
What are the 3 types of project risk?
The three common types of project risks are:
1. Cost risk
2. Market Risk
3. Operational Risk
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