Portfolio risk management accepts the right amount of risk with the anticipation of an equal or higher reward.
Project and program risk management focus on identifying, analyzing and controlling risks and potential threats that can impact a project. There’s simply no room for project failures in a project-driven organization.
Portfolio-based organizations accepts appropriate risks while realizing that strategic portfolio risk management will produce high rewards. For instance, an organization may invest in new technology that has yet to be tested. The potential risk is that the technology may not work. If it does, however, then portfolio risk management would prove beneficial.
Project concerns and risks are often specific to a program or project, but portfolios focus on their entirety, considering the financial value of a portfolio, alignment of the portfolio to the organizational objectives and strategy, and the balance of the projects and programs within the portfolio.
Between portfolio risk management and project and program risk management, the former is more difficult because of the projects’ inherent inconsistencies. There is no one magic formula that will work for an entire portfolio. In fact, what will work for one component, may not necessarily work for another.
One thing is certain; however, portfolio risk management will find ways to decrease potential threats that will impact the value, balance and strategic fitness of a portfolio, and increase positive events for a positive impact.