Risk Management

srm midterms risk management

Risk

To take the chance of

Risk

To expose to hazard

Risk

Dangerous chance or hazard

Risk

The chance of injury, damage, or loss

Certainty

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

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

Uncertainty

Little is known about the alternatives or their outcomes

Risk Management

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

Risk Management

is the systematic process of managing an organization’s risk exposures to achieve its objectives in a manner consistent with public interest, human safety, environmental factors, and the law.

Risk Identification

The process of identifying potential risks that could impact the organization, project, or business.

Risk Identification

This involves reviewing historical data, using expert judgment, brainstorming, and risk assessment tools to identify internal and external threats. It’s important to cover both known risks and those that are uncertain or less obvious.

Risk Assessment

Assessing the likelihood of each risk occurring and the potential consequences or impact if it does.

Likelihood

How probable the risk is

Impact

The severity of the risk’s consequences if it occurs.

Risk Assessment

Outcome: Categorizing risks into high, medium, or low-risk levels, which helps prioritize how to address them.

Risk Control / 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

Continuously monitoring the identified risks, evaluating the effectiveness of mitigation measures, and adjusting plans as needed.

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 management should be an ongoing process rather than a one-time activity.

Risk Communication

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

Risk Communication

This involves clear and transparent communication to keep everyone on the same page about potential threats and actions being taken.

Establish Context

Define the scope and objectives of risk management. Understand the environment and boundaries of your project or business.

Establish Context

The first step of the Risk Management Process.

Risk Identification

Identify what can go wrong (e.g., financial failure, team conflicts, resource shortages)

Risk Identification

The second step of the Risk Management Process

Risk Assessment

Evaluate how likely each risk is and how much damage it could cause.

Risk Assessment

The third step of the Risk Management Process

Risk Response Planning

Develop strategies to deal with the identified risks (avoid, mitigate, transfer, accept).

Risk Response Planning

The fourth step of the Risk Management Process

Risk Monitoring and Control

Implement controls, track risks, and adapt to new risks or changes in the environment.

Risk Monitoring and Control

The fifth step of the Risk Management Process

SWOT Analysis

A tool or technique that identifies the strengths, weaknesses, opportunities, and threats of an organization

Failure Modes and Effects Analysis

A structured approach to identifying potential failure points in a system.

Monte Carlo Simulation

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

Areas of Risk Management

Security, Safety, Quality Assurance, Public Policy, Insurance/Hazard, Financial

Issue-based method

A risk assessment technique that classifies risks under a set of headings

Scoring method

A risk assessment technique that is an extension of checklists and asks how big the effect will be on your project

Quantitative Method

A risk assessment technique that is based on existing plans, especially those on cost and schedule. It assesses risk based on activities affected. It’s measured in terms of money and time.