risk management

risk

an alternative’s outcome cannot be predicted with certainty, but enough information to predict the probability that it will lead to the desired state is available

certainty

objectives are known and accurate, measurable and reliable information about the outcome of each alternative is available

uncertainty

little is known about the alternatives or their outcomes

organizational risks

resources (material, financial, human), corporate position, employee support, supplier and customer support, corporate integrity

strategic

organizational risk management is risk management at the _ level.

risk management

identifying, assessing, and prioritizing _ followed by the coordinated application of resources to minimize, monitor, and control the probability and impact of unfortunate events

risk identification

reviewing historical data, using expert judgment, brainstorming, and risk assessment tools to identify internal and external threats (financial, operational, legal)

risk assessment

evaluating the likelihood of each risk occurring and the potential consequences or impact if it does (probability-impact matrix, risk scoring systems)

likelihood

how probable the risk is

impact

severity of the risk’s consequences if it occurs

risk control and mitigation

developing strategies to either eliminate, reduce, or manage the identified risks

avoidance

changing plans to circumvent the risk

mitigation

reducing the probability or impact of the risk

transference

shifting the risk to another party (e.g., insurance, outsourcing)

acceptance

acknowledging the risk and deciding to live with it if the cost of mitigation is higher than the risk itself

risk monitoring and review

regularly reviewing risk indicators, keeping an eye on any changes in the business environment, and updating risk assessments based on new information

risk communication

ensuring that all relevant stakeholders are informed about the risks and the measures taken to address them

failure modes and effects analysis

a structured approach to identifying potential failure points in a system

monte carlo simulation

statistical technique used to understand the impact of risk by modeling different scenarios

issue-based method

classify risks under a set of headings

scoring method

extension of checklists and asks how big the effect will be on your project; threshold is used to assess the risk/s

quantitative method

based on existing plans, especially those on cost and schedule, assess risks based on activities affected, measured in terms of money and time

realistic attitude

it imposes a _ to the task at hand

overview

it takes an _ of the entire project

uncertainty

it deals with _

tailored

an organization's risk management program must be _ to its overall objectives and should change when those objectives change.

little

don’t risk a lot for a _

afford

don't risk more than you can _ to lose

odds

consider the _ of an occurrence