Portfolio Risk Management

Portfolio risk management involves processes to identify, assess, measure, and manage risk within the portfolio and is focused on events that could negatively impact the accomplishment of strategic objectives. Portfolio risk management is broader than program and project risk management and requires senior leadership involvement.

Some researchers believe that portfolio risk management is an important factor in an organization’s ability to boost business value within an organization. Portfolio risk managers  are well-prepared for more risks, to increase overall portfolio value, and have a higher rate of successful project delivery. Underestimating portfolio risks will expose to danger high level projects.

 

“If you risk something that is important to you for something that is unimportant to you it just doesn’t make sense“. Warren Buffet

It is known that there are two important categories of portfolio risk management: portfolio risk tolerance and the risk management of specific portfolio-level risks. Both components help protect portfolio delivery, but in different ways.