--- title: "Risk management and its steps" subject: "Project Engineering" chapter: 5 key: "semester_7/project_engineering:risk-management-define-steps" source: https://www.bctengineer.com/q/semester_7/project_engineering/risk-management-define-steps site: BCT Engineering --- # Risk management and its steps Project Engineering · Chapter 5: Project Risk Analysis and Management - Asked in: 2074 Asoj, 1+4 marks; 2078 Bhadra, 6 marks (asked 2 times) - Video: [Risk Management | Process and Approaches | Real-Time Examples | in 14 min](https://www.youtube.com/watch?v=jfaABy0E6r4) — Leaders Talk - ThinkEduca - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/risk-management-define-steps - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5 ## Question Define risk management. Describe the steps of risk management. As a project manager, how will you manage risk in a project? ## Short answer Project risk management is the process of planning, identifying, analysing, responding to, and monitoring and controlling risks to reduce threats and increase opportunities. Steps are risk planning, identification, qualitative and quantitative analysis, response planning, and monitoring and control. I would prepare a risk plan, keep a risk register, prioritise risks, choose avoid/transfer/mitigate/accept responses, assign owners, and review regularly. ## Answer #### Definition **Project risk management** is the systematic process of planning, identifying, analysing, responding to, and monitoring and controlling risks in a project, so that the chance and effect of negative events are reduced and the chance of positive events is increased. #### Steps of risk management 1. **Risk management planning:** decide the approach, team, roles, budget, tools, risk categories, probability-impact scales and reporting. The output is the risk management plan. 2. **Risk identification:** find the risks which may affect the project and document them in a risk register (brainstorming, checklist, Delphi, SWOT, interviews, experience). 3. **Qualitative risk analysis:** rank the risks by probability and impact using a probability-impact matrix to find priority risks. 4. **Quantitative risk analysis:** estimate the numerical effect of the main risks on cost and time (expected monetary value, decision tree, sensitivity analysis, Monte Carlo simulation). 5. **Risk response planning:** select the strategy for each risk (avoid, transfer, mitigate/reduce, accept) and prepare contingency plans and reserves. 6. **Risk monitoring and control:** track identified risks, watch for new risks, check the response is working, update the risk register and report. #### Managing risk in my project as project manager 1. Prepare a risk management plan at the start and assign a risk owner to each risk. 2. Identify risks with the team and stakeholders; keep a risk register. 3. Prioritise by a probability-impact matrix; calculate EMV of the top risks. 4. Choose responses: avoid (change design or site), transfer (insurance, performance bond, fixed-price contract), mitigate (testing, early procurement, training), accept with contingency reserve (usually 5 to 10% of cost and time). 5. Include the response actions in the schedule and budget. 6. Hold regular risk review meetings, track triggers, update the register and report to the client. 7. Keep records of lessons learned for future projects. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which is the correct sequence of risk management steps? A. Identification, planning, response, monitoring, analysis B. Planning, identification, qualitative analysis, quantitative analysis, response planning, monitoring and control C. Response, identification, analysis, planning D. Monitoring, planning, identification, response Answer: B. Risk management goes from planning to identification, qualitative and quantitative analysis, response planning and monitoring/control. (Key point: Order of steps) 2. What does qualitative risk analysis do? A. Simulates cost with Monte Carlo B. Ranks risks by probability and impact using a probability-impact matrix C. Buys insurance D. Updates the register only Answer: B. Qualitative analysis prioritises risks; quantitative analysis estimates numerical effects (EMV, decision tree, Monte Carlo). (Key point: Qualitative analysis) 3. Where are identified risks documented? A. Risk register B. Bill of quantities C. Method statement D. Payment certificate Answer: A. Identified risks are recorded in the risk register, which is updated through monitoring. (Key point: Risk register) 4. Which is a practical action of the project manager? A. Assign a risk owner to each risk and accept some risks with a contingency reserve B. Ignore small risks completely C. Avoid reviews D. Remove the risk register Answer: A. The manager assigns owners, prioritises, chooses responses, includes them in schedule and budget, and reviews regularly. (Key point: Project manager actions) ## Related in Project Engineering - [Risk management; qualitative, quantitative; steps](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-qual-quant-steps) — Project Engineering, chapter 5 - [Define risk, types, manage with risk cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-types-manage-cycle) — Project Engineering, chapter 5 - [Manage risk; qualitative and quantitative system](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-manage-qualitative-quantitative) — Project Engineering, chapter 5 - [Risk, sources of risk, risk management steps](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-sources-steps) — Project Engineering, chapter 5 - [Risk types and sources; rectify via risk management](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-types-sources-steps-c75) — Project Engineering, chapter 5 - [Risk in construction projects and its management](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-more-chance-construction) — Project Engineering, chapter 5 ## Related in other subjects - [Manage and perform project work](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Amanage-project-work) — ICT Project Management, chapter 7 - [Risk management plan](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Arisk-management-plan) — ICT Project Management, chapter 12 - [Project risk](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproject-risk) — ICT Project Management, chapter 12 - [Gumbel flood at given risk, 50-year project life](https://www.bctengineer.com/question.md?key=semester_5%2Fengineering_hydrology%3Agumbel-risk-63-58-4200) — Engineering Hydrology, chapter 6