**6. Risk management process**

Risk management process is shown in **Figure 1**.

#### **6.1 Identification of risks**

Risk identification, the first step in the risk management process is usually informal and is performed in various ways, depending on the organisation and the project team. Identification of risks relies mostly on past experience and study of similar executed projects. This being a preliminary stage, a combination of tools and techniques may be used to identify the risks in any project. Here are many methods that fit specific types of challenges and projects especially at identification stage. Risks and threats may be difficult to eliminate, but when they have been

#### **Figure 1.**

*Risk management process.*

identified, it becomes easy to take actions and have control over them. Risk management will be more effective if the source of the risks have been identified and allocated before any problems occur. The main purpose of risk management is that the stakeholders should prepare for potential problems that can occur unexpectedly during the course of a project. Risk management will not only facilitate anticipating problems in advance, but also preparing oneself for the potential problems that may occur unexpectedly. Handling potential threats is not only a way to minimise the losses within a project, but also a way to transform risks into opportunities which can lead to economic and financial profitability. The purpose of identifying risks is to obtain a list of risks which has got the potential to have a cascading effect on the progress of project and different techniques are applied for managing/mitigating the same. In order to find all potential risks which might impact a specific project, different techniques are applied. The project team should use a method they are familiar with so that the exercise will be effective. Effective identification of risks is the first step to a successful risk management.

### *6.1.1 Risk identification techniques*

**Parameter Methodology** Documentation reviews A structured review of project documentation, study of history of execution of similar projects and quality of plans as well as the consistency between those plans and project requirements/ assumptions would be an indicator of risks in the project Information gathering techniques • Brainstorming • Delhi technique • Checklist analysis • Cause and effect diagram

**189**

**Table 5.**

*Process of Risk Management*

logistics and construction.

*6.2.1 Qualitative risk assessment*

• Classification and reference

• Relationship of the risk to other risks

• Risk response/mitigation strategy

• Allocation of risks to stakeholders.

• Description of the risk

• Likelihood of occurrence

*6.2.1.1 Classification and reference*

*6.2.1.2 Description of the risk*

**Risk Classification**

*Classification of risk and its reference.*

Environmental Site conditions, health and safety issues at site Contractual Client, contractor, sub-contractor, etc.

Design Planning permission, preliminary and detailed design, etc.

below (**Table 5**).

process.

• Potential impact

**6.2 Risk assessment**

*DOI: http://dx.doi.org/10.5772/intechopen.80804*

tive risk assessment and qualitative risk assessment.

Various risks that confront a construction industry are not limited to and include financial, economical, political, legal environmental, technical, contractual, planning/scheduling, design, quality operational labour, stakeholder safety and security,

Risk assessment is the second stage in the risk management process where collated data is analysed for potential risks. Risk assessment is described as short listing of risks starting from low impact highest impact on the project, out of all threats mentioned in the identification phase. Risk assessment consists of qualita-

This involves registration of identified risks in a formal manner. A risk register is

Classification is an aid to identifying the source of risk. Examples are furnished

Referencing refers to unique reference number given for each of the identified risks.

This involves giving a brief description of the risk. The description must be unique in order to avoid confusion with similar risks in the risk management

used for formalising this process which is not limited to the following

• Questionnaires • SWOT analysis • Expert judgement

Tools and techniques for risk identification are presented in **Table 4**.

**Table 4.** *Identification of risks: tools and techniques.*

#### *Process of Risk Management DOI: http://dx.doi.org/10.5772/intechopen.80804*

Various risks that confront a construction industry are not limited to and include financial, economical, political, legal environmental, technical, contractual, planning/scheduling, design, quality operational labour, stakeholder safety and security, logistics and construction.
