What are the major components of the risk management process and what happens in each stage?

The five major components of the risk-management process are:

1. Identifying sources of risk - The process of determining which risks might affect the project and documenting their characteristics.

2. Analyzing and assessing risk - This component of the risk-management process is intended to quantify (analyze) and prioritize (assess) the risks identified. Those risks that have a combination of a high probability of occurrence and a high consequence of loss have to be addressed in project planning and execution of the project work.

3. Responding to risk - Once a risk has been identified, analyzed, and assessed, a decision must be made concerning the appropriate response to the specific event. Responses to risk are: Reducing or retaining risk, Transferring risk, or Sharing risk.

4. Planning for contingencies - A contingency plan is an alternative or backup plan that is to be put into action if a possible foreseen risk event materializes and becomes a reality. Contingency plans typically cover schedule, cost, and technical (or scope) risks. Some examples of these risks and conceptual contingency plans to handle the risk events are: Schedule risk, Cost risk, Technical risk

5. Establishing contingency reserves - Contingency funds are established to cover errors in estimates, omissions, and uncertainties that may materialize as the project is implemented.