Risk Management Flashcards
Acceptance
Acceptance
- The risk may be small so the risk may be accepted.
- A risk response appropriate for both positive and negative risks, but often used for smaller risks within a project.
Ambiguity Risks
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.
Escalate
Escalate: the risk (or opportunity) is outside of the project scope and is escalated to management.
Acceptance
Acceptance
The risk may be small so the risk may be accepted.
Transference
Transference
Risk ownership is transferred to third party, usually for a fee.
Exploit
Exploit
A positive risk that a project wants to take advantage of.
Share
Share
A positive risk that can be shared with the organization or other projects.
Contingency fund
Contingency fund
An amount of funds used to offset a project’s risks.
Secondary risks
Secondary risks
A risk response creates another risk.
Residual risks
Residual risks
A risk response may create small generally accepted risks.
Triggers
Triggers
Condition, event, or warning sign that a risk is about to happen. Usually “triggers” a risk
response.
Positive risk
Positive risk
Risks with a positive impact; also called opportunities.
Negative risks
Negative risks
Risks with a negative impact; also called threats.
Pure risk
Pure risk
Only offers a negative impact (injury, fire, theft, destruction).
Business risk
Business risk
Offer an upside or a downside. 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.
Qualitative analysis
Qualitative analysis
Qualifying the risks for legitimacy.
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 analysis
Quantitative analysis
Quantifies the risk exposure.
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.
Utility function
Utility function
A person’s or organization’s willingness to accept risk. Relative to the project priority
as high-priority projects are typically risk adverse.
Also known as risk tolerance.
Cardinal scales
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
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.
Delphi Technique
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.
Decision tree
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.
Enhancing
Enhancing
A risk response that attempts to enhance the conditions to ensure that a positive risk event will likely happen.
Expected monetary value (EMV)
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.
External risks
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.
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.
Low-priority risk watch list
Low-priority risks are identified and assigned to a watch list for periodic monitoring.
Mitigation
Mitigation
A risk response effort to reduce the probability and/or impact of an identified risk in the project.
Ordinal scales
Ordinal scales
A ranking approach that identifies and ranks the risks from very high to very unlikely or to some other value.
Organizational risks
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
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
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.
RAG rating
RAG rating
An ordinal scale that uses red, amber, and green (RAG) to capture the probability, impact, and risk score.
Risk
Risk
A project risk is an uncertain event or condition that can have a positive or negative impact on the project.
Risk identification
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
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
Risk management planning
The agreed-upon approach to the management of the project risk processes.
Risk owners
Risk owners
The individuals or entities that are responsible for monitoring and responding to an identified risk within the project.
Risk register
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
Risk report
The risk report explains the overall project risks and provides summaries about the individual project risks.
Risk response audit
Risk response audit
An audit to test the validity of the established risk responses.
Risk responsibilities
Risk responsibilities
The level of ownership an individual or entity has over a project risk.
Risk score
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
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.
Sensitivity analysis
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
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
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, 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
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
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
VUCA
A prompt list used in risk identification that examines the Volatility, Uncertainty, Complexity, and Ambiguity of risk factors within the project.
