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 training
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 weights 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 3rd Party, organized and then circulated to 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 a 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 occur outside of the project manager’s authority to act upon.
Expect 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 risk 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 or “Acts of god”
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 risk 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:
Political Economic 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
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 risk have only a negative outcome.
For Example, loss of life or limb, fire, theft, natural disasters, etc.
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 the from perspective of each of the following:
Strengths, Weaknesses, Opportunities and Threats
TECOP
A prompt list used in risk identification to examine the following factors of the project:
Technical Environmental Commercial Operational Political
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 ownership of the risk to another party. Insurance, licensed contractors or other project teams are good examples of transference.
A fee and contractual relationship 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 used in risk identification that examines the following risk factors within the project:
Volatility
Uncertainty
Complexity
Ambiguity
