Risk management is a common and widely adopted project practice. Practitioners use risk management based on a common assumption that risk management adds value to projects. Yet, in the complex and ambiguous environment of a project, value is often subjective. If this is the case, then how do stakeholders perceive project risk management to create value? This paper presents a literature review and an empirical study of project risk management as a means of creating value. The empirical study is based on interviews, analyzed through qualitative analysis, to unravel the subjective value of project risk management. Specifically, we addressed how practitioners perceived the connection between project risk management practices and value creation. We found that stakeholders’ perceptions of value played an important role in how value was created through project risk management. What a stakeholder perceives to be important, such as the prospective outcomes of a project, influences the perceived value of a given project risk management practice. The empirical findings indicate the need for a contextualized understanding of the value of project risk management, and thereby provide a more nuanced view of the variety of forms through which project risk management can create value. The findings question the “universal ideal” of PRM value creation portrayed in the academic and practitioner literature.

Introduction

Risk management (RM) is a key task for project organizations, mandated by legislation, industry standards, and internal guidelines. The first principle of RM according to ISO 31000 is that “RM creates and protects value” (ISO 31000, 2018). Yet, organizations often perceive that they fail to create value with their project risk management (PRM) practices, and a popular failure mode is to merely execute it as a tick-the-box exercise (Kutsch et al., 2014; Lehtiranta, 2014; Oehmen et al., 2014). Despite reported challenges in creating value through PRM practices, the implementation of such practices is high, which implies that stakeholders see some value in them. To address these contradictory observations, we investigate how PRM creates value. Our starting point is Lepak et al.’s (2007) definition of value creation as the “process” (how value is created) and the “content” (what is of value). When we study PRM literature through the lens of value creation we find that the content is often assumed to be the project output, success, or benefits, while process is often described as the best practices of performing PRM (Oehmen et al., 2014; Rodrigues-da-Silva and Crispim, 2014).