Les 46: Risk practice 3 – overall project risk Flashcards
What is risk exposure?
Risk exposure is the degree to which a particular objective is ‘at risk’.
The project manager can ask: What is the exposure for costs increasing/decreasing due to this risk? Risk exposure is a neutral concept, as exposure can be positive or negative.
What is risk appetite?
Risk appetite is the amount and type of risk the business is willing to take to pursue its objectives.
It’s a gauge that helps determine how much risk is tolerable in exchange for potential rewards.
It’s a gauge that helps determine how much risk is tolerable in exchange for potential rewards.
What is a risk budget?
A risk budget is a sum of money to fund specific management responses to the project risk.
So it covers the costs of any contingent plans should a risk materialize.
This money cannot be used to fund urgent or crazy last-minute requirements.
Can a risk budget fund urgent and high-priority requirements?
No, a risk budget cannot fund urgent or crazy last-minute requirements.
It is allocated to cover the costs of any contingent plans should a risk materialize.
How would you define risk tolerance?
According to PRINCE2, risk tolerance is a measurable threshold to represent the tolerable range of outcomes for each objective ‘at risk’ using the same units for measuring objective performance. You can also say that risk tolerance refers to the amount of uncertainty or potential adverse outcomes that an organization, project manager, or stakeholder is willing to accept.
According to PRINCE2, it refers to the amount of uncertainty or potential adverse outcomes that an organization, project manager, or stakeholder is willing to accept.
