ISYS438 Project Risk Management Chapter 11 Terms

decision tree

a diagramming analysis technique used to help select the best course of action when future outcomes are uncertain. A common application of decision tree analysis involves calculating expected monetary value

risk sharing

allocating ownership of the risk to another party.

secondary risks

are a direct result of implementing a risk response.

fallback plans

are developed for risks that have a high impact on meeting project objectives and are put into effect if attempts to reduce the risk do not work.

flowcharts

are diagrams that show how different parts of a system interrelate.

management reserves

are funds held for unknown risks that are used for management control purposes. They are not part of the cost baseline, but they are part of the project budget and funding requirements. If the management reserves are used for unforeseen work, they are added to the cost baseline after the change is approved.

contingency allowances

are funds included in the cost baseline that can be used to mitigate cost or schedule overruns if known risks occur.

triggers

are indicators or symptoms of actual risk events.

contingency plans

are predefined actions that the project team will take if an identified risk event occurs.

residual risks

are risks that remain after all of the response strategies have been implemented.

risk enhancement

changing the size of the opportunity by identifying and maximizing key drivers of the positive risk.

risk management plan

documents the procedures for managing risk throughout the project.

risk exploitation

doing whatever you can to make sure the positive risk happens.

risk avoidance

eliminating a specific threat, usually by eliminating its causes.

risk

is "the possibility of loss or injury." Also a general definition of a project risk, therefore, is an uncertainty that can have a negative or positive effect on meeting project objectives.

risk register

is a document that contains results of various risk management processes; it is often displayed in a table or spreadsheet format. A risk register is a tool for documenting potential risk events and related information

interviewing

is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or virtual discussions. Interviewing people with similar project experience is an important tool for identifying potential risks.

risk breakdown structure

is a hierarchy of potential risk categories for a project.

watch list

is a list of risks that have low priority but are still identified as potential risks.

top ten risk item tracking

is a qualitative risk analysis tool. In addition to identifying risks, it maintains an awareness of risks throughout the life of a project by helping to monitor risks.

Delphi technique

is a systematic, interactive forecasting procedure based on independent and anonymous input regarding future events. The Delphi technique is an approach to gathering information that helps prevent some of the negative group effects found in brainstorming.

brainstorming

is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment.

known risks

is sometimes used to describe risks that the project team has identified and analyzed. Known risks can be managed proactively

unknown risks

is sometimes used to describe risks that the project team has identified and analyzed. Known risks can be managed proactively. However, unknown risks, or risks that have not been identified and analyzed, cannot be managed.

risk utility

is the amount of satisfaction or pleasure received from a potential payoff.

expected monetary value (EMV)

is the product of a risk event probability and the risk event's monetary value.

risk factors

numbers that represent the overall risk of specific events, based on their probability of occurring and the consequences to the project if they do occur.

risk acceptance

or accepting the consequences if a risk occurs.

contengency reserves

or contingency allowances are funds included in the cost baseline that can be used to mitigate cost or schedule overruns if known risks occur

risk owner

or person who will take responsibility for the risk: For example, a certain person might be in charge of any server-related risk events and managing response strategies.

risk-neutral

person achieves a balance between risk and payoff. For example, a risk-averse organization might not purchase hardware from a vendor who has not been in business for a specified period of tim

risk-seeking

persons who have a higher tolerance for risk, and their satisfaction increases when more payoff is at stake

risk mitigation

reducing the impact of a risk event by reducing the probability of its occurrence.

risk events

refer to specific, uncertain events that may occur to the detriment or enhancement of the project.

influence diagram

represents decision problems by displaying essential elements, including decisions, uncertainties, causality, and objectives, and how they influence each other

risk transference

shifting the consequence of a risk and responsibility for its management to a third party

Monte Carlo analysis

simulates a model's outcome many times to provide a statistical distribution of the calculated results.

sensitivity analysis

to see the effects of changing one or more variables on an outcome.

work arounds

unplanned responses to risk events when they do not have contingency plans in place.

risk-adverse

when more payoff or money is at stake, a person or organization that is risk-averse gains less satisfaction from the risk, or has lower tolerance for the risk

risk appetite

which is the degree of uncertainty an entity is willing to take on, in anticipation of a reward.

risk tolerance

which is the maximum acceptable deviation an entity is willing to accept on the project or business objectives as the potential impact.

probability / impact matrix or chart

which lists the relative probability of a risk occurring and the relative impact of the risk occurring. Many project teams would benefit from using this simple technique to help them identify risks that need attention.