Risk Management Flashcards
Risk management is the practice of identifying risks, analyzing them, taking actions to avoid the risks identified, mitigating the probability and/or impact of the risk becomming a problem, creating contingency plans for dealing with risks that become problems and monitoring the changing nature of risks as the project evolves.
True
Risk management is a technique or discipline for dealing with uncertainty. Without uncertainty there is no need for risk management.
True
Company A has had 12 catastrophic failures in the last 100 launches and company B has had only 10 catastrophic failures in the last 100 launches. If the cost of a satellite to be carried by company A is $200 million and the cost of a satellite for company B is $250 million, which launch carries the least risk?
Company A because the risk exposure with company A is smaller than it is with company B
The risk exposure for a launch with company A is $24 million, for company B it is $25 million.
Consider the risk of personal injury or material loss when traveling by car.
Give an example of a risk contingency plan.
Find a good hospital and auto body repair shop
What are the two components of risk exposure?
Probability of a risk turning into a problem and the potential impact or loss associated with the problem
Give an example of risk avoidance
A consulting company decides not to write medical device apps for fear of litigation.
Give an example risk reduction
A team creates a UI prototype in order to avoid the risk of delivering a system with an unacceptable UI.
Give an example risk transfer
A business owner wants to use Linux but is concerned about potential intellectual property lawsuits from companies claiming ownership of technologies on which Linux is based. Because of this, the business owner decides to use company A’s brand of Unix because company A is willing to offer indemnification for its Unix users.
Give an example of risk retention
Despite the high probability of not finishing on time, the team decided the pursue the project anyway because of the huge financial payoff if they were to finish on time.
Risk A has a 50% chance of becoming a problem and the consequences would be moderate. Risk B has a 30% chance of becoming a problem and the consequences would also be moderate. You spend proportionally more time and money mitigating the impact of riska but risk B is the one that actually becomes a problem. Did you do anything wrong?
No, you did nothing wrong. Probabilities are probabilities not certainties. There is no indication that the original estimates were wrong.
