Written By: Mark A. Frasher; May 29, 2017
Ok. This should seem obvious. The question, why is risk management important, should at just the mere verbalization of the question, be self-explanatory. The problem with simply accepting the obvious answer - to avoid risk - is that the project manager misses the details, methodologies, and practices of risk management. I've seen many project managers assume that risk management was a natural function of project management, and skip over this planning phase without putting any real effort towards a comprehensive risk prevention and risk mitigation strategy.
Without a thorough understanding of all aspects of risk management, the project manager is not equipped to properly identify, analyze, and strategize to avoid risk. This is why risk management is important. Not only because avoiding risks helps the project manager lead a successful project, but also because every project manager must recognize the value added proposition of mitigating risks.
Risk management is probably, and most definitely according to some scholars, the most critical and important piece of project management. As mentioned in this article, "what is risk management?", risk management encompasses every aspect of project management to some degree. Consider creating your project schedule. This is done to stay on time, or in other words, to avoid the risk of not completing the project on time. Consider creating your project budget. This is done to ensure that project spending does not go over an allocated amount, or in other words, to avoid the risk that money could be wasted on inefficient practices, inadequate materials, too much labor, etc.
The project manager’s job is to deliver a quality project. What the project is depends on the situation, but regardless of what the project is, the project manager has certain responsibilities. If risk management planning isn’t conducted, and a fatal risk occurs, the project manager has failed.
The question is though, how do you know what will happen? Perhaps better said, what will potentially happen? Theoretically, anything can happen and this is what can make project management so difficult. You could be the project manager on a museum construction project, only to have a tornado destroy the building a day prior to its opening. Even knowing that you cannot control everything, risk management is still possible. For example, you could have bought insurance for natural disasters.