11 - Project Risk Management Terms Flashcards
Acceptance
A risk response appropriate for both +VE and -VE risks. Often used for smaller risks within a project.
Ambiguity risks
Risks that have an uncertain, unclear nature, such as new laws or regulations, the marketplace conditions and other risks that are nearly impossible to predict.
Avoidance
A risk response to avoid the risk
Brainstorming
The most common approach to risk identification. Usually completed with SMEs
Business risks
Risks that may have +VE or -VE outcomes.
Cardinal scales
A ranking approach to identify the probability and impact by using a numerical value from 0.01 (low) to 1.0 (certain)
Checklists
A quick and cost-effective risk identification approach
Data precision
The consideration of the risk ranking scores. Takes into account bias, the accuracy of the data submitted, and the reliability of the nature of the data submitted.
Decision tree
A method to determine which of two or more decisions is the best one. The model examines cost/benefits of each decision outcome, and weighs the probability of success for each decision.
Delphi technique
An anonymous method of querying experts about foreseeable risks within a project/phase/component of a project. The goal is to gain consensus on project risks within the project.
Enhancing
A risk response that attempts to enhance the conditions to ensure that a positive risk event will likely happen
Escalating
A risk response that is appropriate for both +VE and -VE risk events that may be outside of the PM’s authority to act upon.
Expected monetary value (EMV)
Monetary value of a risk exposure:
risk probability x $ impact
Used in quantitative analysis.
Exploit
A risk response that takes advantage of the +VE risk within a project.
External risks
Risks that are outside of a project, but directly affect it (e.g. legal/labor issues, weather etc…)
“Force majeure” risks call for disaster recovery rather than project management.
Flowcharts
System/process flowcharts show the relationship between components and how the overall process works.
Useful for identifying risks between components.
Influence diagrams
Charts out a decision problem. Identifies all of the elements, variables, decisions, and objectives and also how each factor may influence another.
Ishikawa diagrams
AKA Fishbone diagrams. Cause and effect diagrams used to find the root cause of factors that are causing risks within the project.
Low-priority risk watch list
Low priority risks are identified and assigned to a watch list for periodic monitoring
Mitigation
A risk response effort to reduce the probability and/or impact of an identified risk in the project.
Monte Carlo technique
A simulation completed using a computer software that can simulate a project, using values for all possible variables, in order to predict the most likely model.
Ordinal scales
A ranking approach that identifies and ranks the risks from very high to very unlikely or to some other value.
PESTLE
A prompt list used for risk identification in the following domains: Political Economical Social Technological Legal Environmental
Probability and impact matrix
A matrix that ranks the probability of a risk event occurring and its impact on the project if the event DOES happen. Used in qualitative and quantitative risk analyses.
Project management risks
Risks dealing with the unsuccessful mgmt of the project.
Eg. unsuccessful allocation of time/resources/scheduling, unacceptable results
Pure risks
Risk with only a -VE outcome
Qualitative risk analysis
An approach that “qualifies” the risks that have been identified in the project.
Analyzes and prioritizes risks based on their probability of occurring and impact.
Quantitative risk analysis
Numerically assesses the probability and impact of the identified risks. Creates an overall risk score for the project.
RAG rating
Ordinal scale, uses RED AMBER GREEN to capture probability, impact and risk score
Residual risk
Risks that are expected to remain after a risk response.
Risk
An uncertain project event/condition that may have a +VE or -VE impact.
Risk identification
Systematic process of combing through the project, the project plan, the WBS and all supporting documentation to identify as many risks as possible that may affect the project
Risk management plan
A project management subsidiary plan that defines how risk will be identified, analyzed, responded to and monitored within the project.
Also identifies the iterative risk management process the project is expected to adhere to.
Risk management planning
Agreed-upon approach to the management of the project risk process.
Risk owners
Individuals or entities that are responsible for monitoring and responding to an identified risk within the project.
Risk register
A project plan component that contains all of the information related to the risk management activities. It’s updated as risk management activities are conducted to reflect the status, progress and nature of the project risks.
Risk report
Explains the overall project risks and provides summaries about individual project risks.
Risk response audit
An audit to test the validity of the established risk responses.
Risk responsibilities
The level of ownership an individual or entity has over a project risk.
Risk score
Calculated score based on each risk’s probability and impact. The approach can be used in both qualitative and quantitative risk analysis.
Root cause identification
Aims to find identify the causal factors for risk event, and then how to events can be mitigated or eliminated.
Secondary risks
New risks that are created as a result of a risk response.
Sensitivity analysis
A quantitative risk analysis tool that examines each risk to determine which one has the largest impact on the project’s success.
Sharing
A risk response that shares the advantages of a +VE risk within a project
SWOT analysis
Examining the project from the perspective of each of the following characteristics: Strengths Weaknesses Opportunities Threats
TECOP
A prompt list used in risk management to examine the below factors in a project: Technical Environmental Commercial Operational Political
Technical, quality, or performance risks
Technical risk: new, unproven, or complex technologies
Quality/performance risk: levels set for expectations of impractical quality/performance.
Transference
A risk response that transfers the risk ownership to another party. (E.g. insurance, licensed contractors)
A fee and a contractual relationship are generally involved with the transference of risk.
Variability risk
A type of risk based on the variations that may occur in the project (e.g. production, number of quality errors, or even weather).
VUCA
A prompt list used in risk identification that examines the below risk factors within a project: Volatility Uncertainty Complexity Ambiguity
