Project Risk Management Terms Flashcards
Acceptance
A risk response appropriate for both positive and
negative risks, but 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 by a project
team with subject matter experts to identify the
risks within the project
Business risks
These risks may have negative or positive
outcomes. Examples include using a less
experienced worker to complete a task, allowing
phases or activities to overlap, or forgoing the
expense of formal training for on-the-job
education
Cardinal scales
A ranking approach to identify the probability
and impact by using a numerical value, from .01
(very low) to 1.0 (certain).
Checklists
A quick and cost-effective risk identification
approach.
Data precision
The consideration of the risk ranking scores that
takes into account any 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
the costs and benefits of each decision’s outcome
and weighs the probability of success for each of
the decisions.
Delphi Technique
An anonymous method of querying experts about
foreseeable risks within a project, phase, or
component of a project. The results of the survey
are analyzed by a third party, organized, and then
circulated to the experts. There can be several
rounds of anonymous discussion with the Delphi
Technique, without fear of backlash or offending
other participants in the process. 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
positive and negative risk events that may
outside of the project manager’s authority to act
upon.
Expected monetary value (EMV)
The monetary value of a risk exposure based on
the risk’s probability and impact in the risk
matrix. This approach is typically used in
quantitative risk analysis because it quantifies the
risk exposure.
Exploit
A risk response that takes advantage of the
positive risks within a project
External risks
These risks are outside of the project, but directly
affect it—for example, legal issues, labor issues, a
shift in project priorities, or weather. “Force
majeure” risks call for disaster recovery rather
than project management. These are risks caused
by earthquakes, tornadoes, floods, civil unrest,
and other disasters.
Flowcharts
System or process flowcharts show the
relationship between components and how the
overall process works. These are useful for
identifying risks between system components.
Influence diagrams
An influence diagram charts out a decision
problem. It identifies all of the elements,
variables, decisions, and objectives and also how
each factor may influence another.
Ishikawa diagrams
These cause-and-effect diagrams are also called
fishbone diagrams and are 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 technique that got its name from
the casinos of Monte Carlo, Monaco. The
simulation is completed using a computer
software program that can simulate a project,
using values for all possible variables, 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
Organizational risks
The performing organization can contribute to
the project’s risks through unreasonable cost,
time, and scope expectations; poor project
prioritization; inadequate funding or the
disruption of funding; and competition with other
projects for internal resources.
PESTLE
A prompt list used for risk identification. PESTLE
examines risks in the Political, Economic, Social,
Technological, Legal, and Environmental
domains.
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
These risks deal with faults in the management of
the project: the unsuccessful allocation of time,
resources, and scheduling; unacceptable work
results; and poor project management.
Pure risks
These risks have only a negative outcome.
Examples include loss of life or limb, fire, theft,
natural disasters, and the like.
Qualitative risk analysis
This approach “qualifies” the risks that have been
identified in the project. Specifically, qualitative
risk analysis examines and prioritizes risks based
on their probability of occurring and their impact
on the project should they occur.
Quantitative risk analysis
This approach attempts to numerically assess the
probability and impact of the identified risks. It
also creates an overall risk score for the project.
This method is more in-depth than qualitative
risk analysis and relies on several different tools
to accomplish its goal
RAG rating
An ordinal scale that uses red, amber, and green
(RAG) to capture the probability, impact, and risk
score.
Residual risks
Risks that are expected to remain after a risk
response.
Risk
A project risk is an uncertain event or condition
that can have a positive or negative impact on
the project.
Risk identification
The systematic process of combing through the
project, the project plan, the work breakdown
structure, and all supporting documentation to
identify as many risks that may affect the project
as possible.
Risk management plan
A project management subsidiary plan that
defines how risks will be identified, analyzed,
responded to, and monitored within the project.
The plan also defines the iterative risk
management process that the project is expected
to adhere to
Risk management planning
The agreed-upon approach to the management
of the project risk processes
Risk owners
The individuals or entities that are responsible for
monitoring and responding to an identified risk
within the project
Risk register
The risk register is 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
The risk report explains the overall project risks
and provides summaries about the 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
The 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
Root cause identification aims to find out why a
risk event may be occurring, the causal factors for
the risk events, and then, eventually, how the
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
positive risk within a project.
SWOT analysis
SWOT analysis is the process of examining the
project from the perspective of each
characteristic: strengths, weaknesses,
opportunities, and threats.
TECOP
A prompt list used in risk identification to
examine the Technical, Environmental,
Commercial, Operational, and Political factors of
the project.
Technical, quality, or performance risks
Technical risks are associated with new,
unproven, or complex technologies being used on
the project. Changes to the technology during the
project implementation can also be a risk. Quality
risks are the levels set for expectations of
impractical quality and performance
Transference
A risk response that transfers the ownership of
the risk to another party. Insurance, licensed
contractors, or other project teams are good
examples of transference. A fee and contractual
relationships are typically involved with the
transference of a risk
Variability risks
A type of risk based on the variations that may
occur in the project, such as production, number
of quality errors, or even the weather.
VUCA
A prompt list used in risk identification that
examines the Volatility, Uncertainty, Complexity,
and Ambiguity of risk factors within the project
