Understanding difference between Individual project risk and overall project risk is important for project management professionals. It is especially important for people going to attempt PMP Exam. Let’s look at the difference…
Individual project risk Vs Overall project risk
Individual project risks are the risks that we identify in the project. By looking at the impact assessment of these risks identified in project, you can rank them which one is more severe and which one is less. Accordingly you can assess whether a quantitative assessment is required. The process of risk management documented in PMBOK is to manage individual risks in project.
However it is also important for the project manager to understand the overall risk exposure of the project. If a program manager has 10 projects in his program, how he will assess which project is more risky and which one is less. Similarly you need to assess overall project risks to contribute in portfolio risk management. Therefore project managers should assess the overall project risk. Sometimes called risk profile or overall risk exposure of the project. Overall risk is not just sum of individual risks you have identified in the project but it also includes other sources of uncertainties.
Overall project risk is defined as “the effect of uncertainty on the project as a whole”. It is the joint effect of all risks in the project and other sources of uncertainty. It is stakeholders’ perception of the effect of various variables/uncertainties on the overall outcome of the project. The main objective of the overall risk assessment is to understand the degree of achieving the final project goal.
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