(06) Managing Risk Flashcards
What is Project Risk?
Project risk is an uncertain event or condition that, if it occurs, has positive or negative effects on a project objective.
What does Project Risk consist of?
Cause and, if it occurs, a consequence.
What are the forms of project risk to different people?
- Different people and varies according to viewpoints and experience.
- Engineers, designers and contractors view risk from the technological
perspective
- Lenders and developers tend to view it from the economic and
financial side
- Health professionals, environmentalists, chemical engineers take a safety and environmental perspective.
What are the risk categories?
- Technical Risks.
- Schedule Risks.
- Costs Risks.
- Funding Risks.
What is a Technical Risk?
If chosen technology fails.
What are Schedule Risks?
- Use of slack increases the risk of a late project finish.
- Imposed duration dates – i.e., absolute project finish date.
- Compression of project schedules due to a shortened project duration date.
What are Costs Risks?
- Costs increase when problems take longer to solve than expected.
- A rise in input costs if the duration of a project is increased.
What are Funding Risks?
Changes in the supply of funds for the project can dramatically affect the successful completion of a project.
What are the most common project risks?
- Cost risk.
- Schedule risk.
- Performance risk.
What is cost risk?
Typically escalation of project costs due to poor cost estimating accuracy and scope creep.
What is schedule risk?
- The risk that activities will take longer than expected.
- Slippages in schedule typically increase costs and, also, delay the receipt of project benefits, with a possible loss of competitive advantage.
What is performance risk?
The risk that the project will fail to produce results consistent with project specifications.
What are other further risk types?
- Governance risk.
- Strategic risks.
- Operational risk.
- Market risks.
- Legal risks.
- Risks associated with external hazards.
What are governance risks?
Relates to board and management performance with regard to ethics, community stewardship, and company reputation.
What are strategic risks?
Result from errors in strategy, such as choosing a technology that can’t be made to work.