Formal and informal risk management actions in projects

This paper presents the current risk management activities in projects. The findings are based on a 3-year GPSII research project that was conducted in co-operation with VTT, Helsinki University of Technology and Helsinki School of Economics. The purpose of the GPSII research project was to identify and analyse interactions between cultural processes, network connections and risk management practices in global delivery projects. This paper discusses the project risk management activities from two perspectives: Firstly, the current risk management procedures in projects are briefly summarized. Secondly, the view is broadened to include more informal risk management actions outside the formal risk management process. It is discussed whether these informal actions are actually being used to cover the areas where formal risk management lacks the flexibility and agility required. It is argued that the informal processes and mechanisms are often hidden and their significance both to the project risk management process and to the risk level of the project is not well understood. It is concluded that the efficiency in project risk management arises from developing both the formal risk management processes and the informal activities in parallel to creating new flexible and more interactive risk management tools.