The projects you’ll manage will face many different risks. First of all, let’s define what we mean by risk. Project risks have two characteristics. They’re events that might happen, and they have the potential to impact one or more of the project objectives. There are two types of project risks, namely, negative risks and positive risks. A negative risk is also called a threat. This type of risk has the potential to harm a project and its objectives. Positive risks are called opportunities. These can benefit a project’s objectives. One type of situation that presents obvious threats and opportunities in a project is when innovation has been introduced. Innovation implies that you’re trying a new way of doing things instead of following an old, well established principle or procedure. However, you don’t know how the innovation is going to work out. So with innovation comes an increase in project risk. Let’s use an example. You are managing a project to upgrade a gym so it features state of the art equipment and facilities. You’ve applied some innovative thinking to the technical regulatory and marketing areas of this project but you know there may be risks as a result. [Technical] For technical innovation, you’ve decided to use a range of gym equipment that a new company has manufactured. You’ve researched the equipment and heard good reports so far, but this range hasn’t been on the market for long. There is a possible threat that the equipment won’t deliver on its promises. However, there is also a good opportunity. The gym is a forerunner in using what could become a popular and well respected brand of gym equipment. [Regulatory] The current layout of the gym is outdated so you decide to completely redesign it. The new plans affect the regulatory area of this project because they must adhere strictly to new health and safety regulations. For example, the government has recently changed the rules about the number and location of fire escape routes.
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