Risk management is the methodology of determining, evaluating, and controlling threats to the earnings and capital of a given organization ( Sadgrove , 2016 ) . With risk management, a firm can mitigate or remove costs to a certain project with the capability to alter the anticipated outcomes in managing that particular project. In most cases, these risks originate from different sources like legal liabilities, financial uncertainties, strategic management errors, technology issues, natural disasters, and accidents. A risk management plan is often supervised by project managers during the entire project implementation.

To effectively address the risk, the project managers should have a thorough comprehension of their goals, so that they can determine any potential hindrance that may prevent the team from obtaining their objectives. Although project management concentrates on defining an objective and implementing the stages of attaining that objective, risk management entails determining and reducing threats that may influence progress. By understanding the possible risks, management is capable of entirely figuring out how threats might in the right way impact the performance of the project and what they are doing to minimize their consequences by: