Project Risk Management

Project risks are not only of external but also of internal nature to both project sponsors and customers. Effective risk management is a prerequisite to striving to attain competitive advantage in project finance and create successful deals. This chapter discusses the objectives and importance of project risk management and presents a taxonomy of external risks. It explores the origins or sources of project risks which is necessary to develop appropriate risk management plans. The chapter summarises the responsibilities and activities associated with risk management and the entities that are involved in it. It explains the process of analysis, prioritization, and the mitigation of risks and that helps to determine the activities involved in the sequence of the process steps. The chapter presents some commonly used risk-management instruments and mitigants, and discusses risk-management benefits and costs, success factors, and regularly present challenges.