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. If a person follows a risk management plan, then a successful project can be attained. 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 sales process of the company. 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 doesn’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 project increases.
5. Cost Risk
Cost risk is one of the common types of risks that result in poor planning and inaccurate cost estimation. The risk gets higher when the demand of the clients increase.
6. Schedule Risk
The schedule 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 ethics, regulations and company reputation that is directly linked with project sponsors and project stakeholders.
8. Market Risk
Market risk is unpredictable that includes interest rate risk, market trend, 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. The 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, and 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 common three types of project risks are:
1. Cost risk
2. Market Risk
3. Operational Risk