What is the Connection Between Project Management and Risk Management?

Project management and risk management are related and overlapping fields with distinct responsibilities. The former is the activity of managing the three key factors in a project: resources, time, and quality. The latter involves mitigation of threats to a project in any of the three factors. Project management particularly refers to a one-time endeavor, while risk management may refer to a one-time or ongoing activity.

Project management is a balancing act between the availability and affordability of resources, the time it takes to acquire or utilize resources, and the quality of the product. Project managers realize that they can sacrifice quality to meet a schedule, they can abandon a schedule due to resource limitations, or they can blow a budget to produce a quality project. A project manager is constantly trading off these three aspects in a game of rock-paper-scissors. Risk management supports project management by identifying and attempting to circumvent either internal or external events that could jeopardize the project’s resources, time availability, or quality. This typically involves putting procedures in place to handle events in a standard and consistent manner.

Risk managers, for example, will institute policies regarding staff qualifications to ensure that human resources are available, trained, and capable of performing the task required. These managers may also evaluate the financial resources of a project, noting the sources of alternate funding or predicting the potential impact of various changes in the economy, government regulation, or public perception. Risk management usually reports to project management, but may be hired by investors, owners, or others to audit project managers or to provide independent assessment of project performance.

Project management is often performed by technical people who have worked their way up through an organization. Formal training in this field is often acquired through seminars, executive education classes, or ongoing education classes. Risk management, if performed for an ongoing organization, is more likely to be staffed by professionals in the field of risk assessment and mitigation. Project management and risk management for one-time projects may be temporary assignments for the professionals involved. Alternatively, successive clients or assignments may be treated as individual projects and the principles of project management and risk management employed for each case.

Project management and risk management offer career challenges to candidates who are knowledgeable in their field, who are capable of on-site rapid assessment and decision-making, and who can communicate clearly and effectively. These jobs are usually conducted through indirect lines of authority. Managers will communicate with purchasing, production, and other departments without direct responsibility for any of these functions. Project and risk managers typically report to upper management. Diplomacy, the ability to motivate, and the ability to communicate at multiple organizational levels are keys to success in project management and risk management.