Project managementLesson 1 of 3 in the course Project risk

Risk Management: Identification, Assessment, and Response

5 flashcards · 5 quiz questions · 5 match pairs · 5 fill-in sentences · English

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Summary

This lesson introduces risk management, the difference between threats and opportunities, and principles that help organizations make sound decisions.

Risk is the possibility that an event will adversely affect an objective. Because the event and its consequences are uncertain, risk is not simply a known loss. Risk management is the systematic identification, evaluation, and prioritization of risks, followed by actions to reduce, monitor, or control their probability or impact.

All flashcards

What is risk?
Risk is the possibility that an event will adversely affect the achievement of an objective; it involves uncertainty about whether the event will occur and what its effects will be.
What does risk management involve?
It involves identifying, evaluating, and prioritizing risks, then reducing, monitoring, or controlling their probability or impact.
How do threats differ from opportunities?
Threats are uncertain events with potentially negative consequences. Opportunities are uncertain events with potentially positive consequences.
What is opportunity cost in risk management?
It is the value of alternative uses of resources committed to a risk response, such as money or staff time spent on one mitigation rather than another activity.
Name three principles of effective risk management.
It should be integrated into decisions and organizational processes, use the best available information, and remain dynamic through continual reassessment. Transparency and attention to human factors are also important.

Quiz questions

  1. What is risk in relation to an objective?Answer: The possibility that an event will adversely affect the objective.
  2. What is a positive uncertain event called in modern risk management?Answer: An opportunity.
  3. Why should an organization consider opportunity cost when selecting risk controls?Answer: Resources used for one control are unavailable for other uses.
  4. A team focuses only on preventing failures and overlooks a chance to deliver early. What does this illustrate?Answer: Threat fixation can cause the team to overlook beneficial uncertainty.
  5. Which practice best reflects effective risk-management principles?Answer: Embedding risk work in decisions and revisiting it as conditions change.

Based on the Wikipedia article Risk management, licensed CC BY-SA 4.0. Adapted into a summary, flashcards and quizzes.

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