Categorizing Project Execution Risks

8 Oct 2010 Sandeep Mehta

Here is an interesting article in the Project Management Journal about types of risks in project management:

  1. Strategic risks: Those that relate to project goals (short-term or long-term)
  2. Operational risks: Those that relate to project operations, individual outputs and results
  3. Contextual risks: Those from circumstances outside of the project that may influence the scope of work and the performance of the organization. Examples are competing projects, change in ownership and management, legislation and governmental directives, media attention,  market conditions, and accidents.
As is the case in most activities, project managers tend to focus on operational risk at the expense of strategic risks:

In this study, risks are categorized as risks to operational, long-term, or short-term strategic objectives, and, by studying a dataset of some 1,450 risk elements that make up the risk registers of seven large projects, we examine how operational and strategic risks are distributed in the projects. The study strongly indicates that risks to a project’s strategic objectives rarely occur in the project’s risk registers, though project success and failure stories indicate their importance.

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