Risk management is the process of identifying risks, reducing them when possible, and making plans to deal with undesirable outcomes.
Risk management can be done for an ongoing concern, such as a product line or company, or for an individual project, such as rolling out a new software package. Risk management becomes increasingly more important as the size of a project increases.
Informal risk management is an intuitive process. As children, we did risk management when we were at the top of “Dead Man’s Hill” on our skateboards. We thought about the risks, calculated the odds in our heads, looked for places we could bail out along the way, and then took the plunge.
Risk management for companies, though is usually more formal process to make sure that all the bases are covered. The bigger a project and the higher the risk, the more structured risk management should be.