Individual project risk Vs Overall project risk

Understanding difference between Individual project risk and overall project risk is important for project management professionals. It is especially important for people going to attempt PMP® Exam. Let’s look at the difference…

Individual project risk Vs Overall project risk

Individual project risks are the risks that we identify in the project. By looking at the impact assessment of these risks identified in project, you can rank them which one is more severe and which one is less. Accordingly you can assess whether a quantitative assessment is required. The process of risk management documented in PMBOK® Guide is to manage individual risks in project.

However it is also important for the project manager to understand the overall risk exposure of the project. If a program manager has 10 projects in his program, how he will assess which project is more risky and which one is less. Similarly you need to assess overall project risks to contribute in portfolio risk management. Therefore project managers should assess the overall project risk. Sometimes called risk profile or overall risk exposure of the project. Overall risk is not just sum of individual risks you have identified in the project but it also includes other sources of uncertainties.

Overall project risk is defined as “the effect of uncertainty on the project as a whole”. It is the joint effect of all risks in the project and other sources of uncertainty. It is stakeholders’ perception of the effect of various variables/uncertainties on the overall outcome of the project. The main objective of the overall risk assessment is to understand the degree of achieving the final project goal.

More on Project Risk Management

  1. Project Risk Management Workshop – Learn the art of managing uncertainties in the projects
  2. Risk Appetite Vs Risk Tolerance

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2 thoughts on “Individual project risk Vs Overall project risk

  1. Can you give examples of individual project risks and overall project risk to show their differences? So, overall risk = individual risks + effect of uncertainty?

  2. Dear JS,

    The risks you identify in your projects are called individual project risks. The overall resultant impact of these risks on the project is called overall project risks. This may not be simple summation of individual project risks.

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