Managing Overall Project Risk

Leading project risk management guidelines include a definition of a higher level of risk in projects, called “overall project risk”, which is different from individual risks. For example, the PMI Guide to the Project Management Body of Knowledge (PMBoK ® Guide) (Project Management Institute, 2013) defines individual risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives”, whereas overall project risk is defined as “the effect of uncertainty on the project as a whole … more than the sum of individual risks within a project, since it includes all sources of project uncertainty … represents the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.” Unfortunately the concept of overall project risk is usually overlooked in the project risk management approach adopted by most organisations. This means that our risk processes focus exclusively on individual risks and we fail to identify or proactively manage the overall risk exposure associated with our projects. Little assistance or support is offered by current project risk management guidelines, which do not elaborate on how overall project risk should be addressed during the project risk management process; they merely define the concept then say little more. This paper clarifies the concept of overall project risk, explains its importance, and outlines how it can be identified, assessed and managed. Only by broadening our risk approach to include this aspect can we answer two key questions from project sponsors, stakeholders and customers: “How risky is this project? And what are you doing about it?”