1. Principles and Elements of Risk Management – Data and Initial Conditions

This chapter is devoted to furnishing background information on Risk Management, explaining the string of steps that comprise it, and the use of techniques within it, as well as their relationships. The chapter follows the widely accepted sequence for risk identification, assessment, execution, remediation and control; it starts with some basic definitions and, in its first topic, analyzes the sources for risks, considering internal and external risks and opportunities. It follows with a guide for identifying and managing risks in different areas of a project and suggests appropriate tools and techniques for each one. Completion of sequence sensitivity analysis, a subject developed in full in Chap. 6, is commented upon briefly just to give the reader an idea of its use and potential, the sequence finishes with steps for closing and reporting. Establishing a procedure that is a norm in this book, a real life example is proposed using SWOT analysis (This is a planning technique for assessing a firm capability for executing a project considering Strength, Weakness, Opportunities and Threats) to illustrate a firm self-evaluation regarding risks for a particular project. The chapter concludes with the definition of a project strategy, a fundamental step, since it will determine the road to follow for a successful project to be finished on time, under budget and with the required quality.