On the Project Management Risk Management

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					On the Project Management Risk Management
Abstract: Risk management throughout all stages of project management and
all areas of project management in the important and difficult. The
essence of the most economical way to eliminate the risk caused by
disasters consequences. Risk management includes risk identification,
risk assessment, risk prevention systems respond to a whole set of
scientific management. From the basic concept of risk, focusing on the
sources of risk, identification, analysis, evaluation and control, want
to practice with some reference.
Key words: risk; risk identification; risk control

An overview of the risks and characteristics

1.1 Risk Overview
Definition of risk first appeared in 1901, the United States, Ph.D.
thesis written by AM Willet, "Economic Risk and Insurance
Theory": "risk is not willing to place on the incident
reflected the uncertainty of the objective." This definition
emphasizes objectivity of risk and uncertainty. Subsequently, many
experts and scholars on this basis to the risk under a variety of similar
Although many definitions of risk, but generally can be divided into two
categories, and the first definition emphasizes the risks of uncertainty.
Second definition emphasizes the uncertainty of the risk of loss.
In fact, the risk is the uncertainty of an event and its possible results
of the combined effect of uncertainty.

1.2 Characteristics of risk
The characteristics of risk refers to the nature of the risk of the
performance of its occurrence. Include: objectivity, uncertainty,
predictability, loss of, the results of double nature.

2 The concept of project risks and causes

2.1 Definition of project risk
Generally considered: project risk is the project's environment and
conditions due to the uncertainty and subjectivity itself can not
accurately foresee or control factors, the final outcome of the project
stakeholders with the project's expectations related to departure from,
and thus to the project stakeholders the possibility of loss subject.

2.2 The causes of project risk
The formation of the root causes of project risk is that people change
for the project development and awareness and response decision-making
problems, including:
¢Ù awareness is limited.
¢Ú the lag characteristics of the information itself.
¢Û Project management and communication of information resources
management issues.

3 sources of project risk

There are many sources of project risk, the risk of different projects
have different trigger sources. Include:
(1) natural risks: that the uncertainty due to natural factors affecting
the real estate project, which developers and operators of real estate
(2) Political Risk: refers to the potential due to policy changes to real
estate developers and operators of the economic losses. Including: the
political environmental risk, the risk of political reform, environmental
policy changes risk, war risk, the risk of economic reform, the risk of
land use system reform, housing reform risks.
(3) Economic Risk: refers to a range of economic conditions and
uncertainties related to economic development, the impact on the real
estate market. Including: finance, finance, land, market demand and
supply, project bidding, changes in domestic economic conditions such as
(4) Technical risk: that due to scientific and technological progress,
technological structure and related changes in variables to the real
estate investment potential losses. Including: science and technology,
construction technology and process innovation, change and update
building materials, design changes and calculation errors, the risk of
shortage of productive forces.
(5) social risk: that due to changes in humanities and social
environmental factors affect the real estate market, so to engage in real
estate operators of commodity production and the possibility of loss.
Include: urban planning, the volume ratio changes, regional development
and heritage conservation, public security, public intervention risk.
(6) International Risk: refers to changes in the international economic
environment, led to regional economic activities. Including:
international investment environment risk, the risk of currency exchange
rate changes.
(7) the internal decision-making and management of risk: that due to
developers planning mistakes, errors, or poor management decisions led to
the expected level of income can not be achieved. Including: investment,
location, type selection, organizational management, time management,
contract management and other risks.

4 Project Risk Identification

4.1 The definition of risk identification
Risk identification is Ö¸ risk management personnel in the collection of
information and research after, using various methods right has not
happened in the Qianzai risk Yiji objective of the various risks to
Xitong classified He fully recognized. The main content of risk
identification: identification of risk factors lead to what, what is the
major factor, and these risks may lead to the consequences. Reposted
elsewhere in
4.2 The process of risk identification
(1) to confirm the objective existence of uncertainty. First to identify
the factors found in or suggested the existence of uncertainty, and then
confirm the objective existence of this uncertainty.
(2) establish a preliminary list of risk factors. The objective existence
of and potential risk factors listed in the list, should include
environmental impact, decision-making.
(3) the establishment of various risk events and guess the results.
According to the preliminary list of risks listed in the major risk
factors, suggesting the possibilities associated with a focus on
financial results for the funds.
(4) Development of risk prediction chart. Analysis of the likelihood of a
risk of its size and potential hazards.
(5) the risk classification. First of all, to deepen awareness and
understanding of risk, then to discern the nature of risk, help in
developing risk management objectives.
(6) establishment of a risk catalog page. This is the risk identification
process, the final step. List of summaries through the establishment of
project risks can be risks to the project may be listed side by side
summary of priorities, give people an overall impression of the risk map.

4.3 The main methods of risk identification
(1) decomposition: is the project management of difficult to understand
the complex process of decomposition into more things easy Bei Ren Shi
Jian Dan things, will go down into Xiao Ji Tong Ji Tong, Zhe In analyzing
the issue is Renmen ³£ÓÃ method;
(2) fault tree analysis: is the use of graphic will be a great risk in
the form of broken down into various small risk, or the cause of all the
risks caused by decomposition. The method is used to project the risk of
the tree coarse to fine, from big to small, layered approach, so easy to
identify all risk factors, clear relations.
(3) expert survey include: brainstorming method and the Delphi method.
The latter is well-known U.S. consulting organization Rand Corporation
invented in the early fifties. It depends on the expert's intuitive
ability to identify risk, view step by step through the investigation
focused on, until some degree of uniformity, so called expert opinions on
(4) Flow: Used to give a project the workflow, project different parts of
the relationship between the chart and other information.
(5) Scenario Analysis: By the numbers, charts and curves, a state project
or a future situation in a detailed description and analysis to identify
the key factors that lead to project risks and the impact of a risk
(6) Financial statements Law: According to the project's accounting
records and financial statements as the foundation for each unit of
accounting subjects as risk analysis and found that the risk may exist,
and then summarize, the method concludes.
(7) Sensitivity analysis: The project life cycle, when the project
variables and project a change in a variety of assumptions, the project's
economic evaluation index which changes occur and how much range.

5 Project Risk Analysis and Assessment

5.1 Risk Assessment of knowledge
Risk assessment is to predict and identify pre-established based on
system model, risk factors for quantitative analysis, and estimate the
probability of occurrence of various risks and loss, and in order to find
the key risks of the project, focus disposal to provide the scientific
basis for this risk. Risk assessment results will affect the risk
management decision-making, its accuracy determines the validity of risk

5.2 Risk assessment methods
Divided according to the nature of qualitative, quantitative, and a
combination of both methods. Qualitative methods are AHP and expert
rating methods, etc.; quantitative methods are Monte Carlo simulation,
graphics, technology assessment, risk assessment techniques. Divided
according to purpose: the source of risk identification, risk probability
forecasting, frequency statistical analysis, risk assessment of the
consequences, risk decision-making, management plans and measures to
develop other methods. Assessment by application of the object is divided
into: for the duration of the accident (or failure), contract,
management, exchange (interest) rate, the natural climate, geological
conditions, disasters, forecasting and decision-making analysis of
assessment methods.

6 Project Risk Strategies

(1) reduce the risk. Predicted by means of relaxation or to reduce risk,
reduce risk and the likelihood or mitigate the adverse consequences of
(2) prevention of risks. Is a pro-active risk management strategies,
often in tangible and intangible means.
(3) risk aversion. Means that when the project risk the possibility of a
potential threat to place too much negative consequences are too serious,
no other strategies can be O'clock, take the initiative to abandon
Xiangmu or Gaibian project objectives and action programs designed to
circumvent the Fengxian De kind of tactic.
(4) risk transfer. Refers to the transfer of risk to others involved in
the project or organization, also known as risk-sharing partner.
(5) to accept the risk. That a conscious choice to risk the consequences.
Can be active and can also be passive. The easy acceptance of risk is the
most economical method of risk aversion.
(6) reserve risk. Means the project risks and developing contingency
measures prior law and the development of a scientific and efficient
project risk plan, if the actual progress of the project differ from the
plan on the use of back-up emergency measures.

7 Project Risk Control

(1) the concept of risk control project.
Risk control is the use of certain technologies, such as prototyping,
reliability engineering and project management methods, some manage to
avoid or transfer risk.
(2) project control steps.
Done in front of, the purpose is to achieve good risk control. In the
light of actual experience in project management, based on the proposed
risk control using the following steps: ¢Ù and project members are now
serving in consultation to determine the reasons for movement; ¢Ú the
project before the start of the work to alleviate these causes have been
proposed to include control plan; ¢Û When the project starts and do the
movement appears prepared to take some measures order to ensure the
project can still continue when once left; ¢Ü the establishment of
project team members so that all items can be kept informed of project
activities, information ; ¢Ý develop documentation standards and
establish a mechanisms to ensure the document can Jishi produce; ¢Þ all
Gongzuozuzhi detail of the assessment, so that more people can schedule
the work completed on their own; ¢ß on each key technical personnel, to
train reserve officers; ¢à milestone in the project office for event
tracking and tracking of major risk factors to the risk of re-evaluation;
¢á in the project development process to keep the information on the risk
factors related to the collection.