Risk Analysis

A comprehensive framework within which risks can be managed effectively and financial values placed upon them, aiming to achieve as much certainty as possible about a long term and uncertain future. In the case of a new project, the process covers the project's entire lifecycle, from initial conception to eventual termination. The process facilitates risk mitigation and provides a system for the control of the remaining risks.

Risk Analysis Histogram

A view in which the results of risk analysis are displayed as vertical bars, S-curves, or tables against a date scale.

 

Risk Analyst

An individual whose primary task is the identification and evaluation of risks during the risk review. 

Risk and Contingency Management

The process of identifying, analyzing and responding to risk events throughout the project life cycle in a manner that is in the best interests of the projectÍs objectives and its success indicators.

Risk Assessment

The process of identifying potential risks, quantifying their likelihood of occurrence and assessing their likely impact on the project.

Review, examination and judgment whether or not the identified risks are acceptable in the proposed actions.

Risk Assessment Tables

Tables that may be used to allocate "scores" to risks, to help in prioritizing them. 

Risk Assumption

Risk assumption is an acknowledgment of the existence of a particular risk situation and a conscious decision to accept the associated level of risk, without engaging in any special efforts to control it. 

 

Risk Avoidance

The process of planning activities so as to avoid identified risks by using an alternative method. 

Planning activities to avoid risks that have been identified. 

Risk Brainstorming

An intense and focused scrutiny of an issue with the aim of covering it as comprehensively as possible and, in particular, identifying and discussing risks which might not otherwise be considered in the absence of such an intellectually charged and spontaneous environment. A brainstorming session should normally be led by a "facilitator" whose task is to encourage suggestions, avoid criticism, and generally create an atmosphere in which participants are motivated to put forward as many relevant ideas as possible.
A useful technique is to divide the session into two phases:

 The generation of ideas where participants put forward ideas but no discussion is permitted (except for clarification) and the ideas are listed on a flip-chart by the facilitator.

Constructive discussion of the listed ideas to identify those that deserve to be explored further.

Risk Custodian

An individual who has responsibility for monitoring, controlling and minimizing the project's residual risks.

Risk Data Applications

The development of a data base of risk factors, actual responses and consequences, both for the current project and as a matter of historic record.

The development of a data base of risk factors both for the current project and as a matter of historic record. 

Risk Deflection

The act of transferring all or part of a risk to another party, usually by some form of contract. 

Risk Diary

A logbook maintained by the risk process manager which should, inter alia, contain a record of key events in the planning and execution of the RA process, any problems encountered and unforeseen risks which arose, the results of the risk reviews and ways in which future risk reviews or the RA process itself could be improved.

Risk Evaluation

Process used to determine risk management priorities.

Risk Event

Precisely what might happen to the project, including both recurring, scaled, events and non-recurring, one time only, or discrete events. 

The precise description of what might happen to the detriment of the project.

A discrete occurrence that effects a project. 

The occurrence of an event which has the potential to affect the viability of a project. 

Risk Event Status

A measure of importance of a risk event. Also referred to as criterion value or simply its ranking.

Risk Factor

Any one of:

Risk Event
Risk Probability
Amount at Stake.

Risk Identification

The process of systematically identifying all possible risk events which may impact on a project. They may be conveniently classified according to their cause or source and ranked roughly according to ability to manage effective responses. Not all risk events will impact all projects, but the cumulative effect of several risk events occurring in conjunction with each other may well be more severe than the examination of the individual risk events would suggest.

Determining which risk events will effect the project.

The identification of programmatic and product risks relative to the project opportunity or opportunities within the project.

Process of determining what could pose a risk.

Risk Management

An organized assessment and control of project risks.

The art and science of identifying, analysing and responding to risk factors throughout the life of a project and in the best interests of its objectives.

Organized control of risks.

The overall process of managing risk including risk identification, risk analysis, risk reduction, risk transfer, risk avoidance and contingency planning.

Systematic application of policies, procedures, methods and practices to the tasks of identifying, analysing, evaluating, treating and monitoring risk.

The process whereby decisions are made to accept known or assessed risks and/or the implementation of actions to reduce the consequences or probability of occurrence.

The process of managing risks identified in the risk review using the risk mitigation strategies in the risk response plan. 

Risk Management Budget

The process of establishing a budgetary structure for identified and quantifiable risks within a fixed bid project.

Risk Management Plan

A document defining how Project Risk Analysis and Management is to be implemented in the context of a particular project.

Part of the program definition statement that contains a record of all the risks in the business environment, and to the program itself.

A component of the program definition statement, containing a record of all risks in the business environment and to the program itself. It assesses possible impact and what is to be done (and when) to avoid, remove and control them. It includes the detailed processes for managing the risk.

Documentation of the overall management program actions or practices that deal with program risks. It includes planning for risk, assessing (identifying and analysing) risk areas, developing risk handling options, and monitoring risks to determine how they have changed. 

Risk Matrix

A matrix with risks located in rows, and with impact and likelihood in columns.

The presentation of information about risks in a matrix format, enabling each risk to be presented as the cell of a matrix whose rows are usually the stages in the investment life-cycle and whose columns are different causes of risk.
A risk matrix is useful as a checklist of different types of risk which might arise over the life of a project but it must always be supplemented by other ways of discovering risks. 

Risk Mitigation

Action to reduce, transfer, or eliminate risk.

The act of revising the project's scope, budget, schedule or quality, preferably without material impact on the projects objectives, in order to reduce uncertainty on the project.

Risk Mitigation Strategy

An overall plan for mitigating the risks in the investment activity. 

Risk Prioritising

The ordering of risks according to their risk value and then deciding which need to be considered for risk reduction, risk transfer, risk avoidance, or contingency allowance etc. 

Ordering of risks according first to their risk value, and then by which risks need to be considered for risk reduction, risk avoidance, and risk transfer.

Risk Probability

The degree to which the risk event is likely to occur.

Risk Process Manager

The manager who will plan, lead and co-ordinate the RA process.

Risk Quantification

Process of applying values to the various aspects of a risk.

Evaluating the probability of risk event, effect and occurrence.