Why is it important to identify risks during project initiation?

Identifying risks during project initiation is crucial because it allows management to assess the potential threats and uncertainties associated with a project. By understanding these risks early on, management can make informed decisions about whether to proceed with the project, modify it, or potentially abandon it if the risks are deemed too significant. This proactive approach helps to mitigate problems later in the project lifecycle, ensuring that the organization is not committing resources to a project that could jeopardize its objectives or financial stability.

Evaluating risks at this stage also facilitates better planning for risk management strategies, which can include risk avoidance, mitigation, or taking on certain risks while being prepared to handle negative outcomes. This process is fundamental for safeguarding the investment and aligning the project with organizational goals and appetite for risk.