TPM 4.0 Project Risk

Decision tree analysis

A diagramming and calculation technique for evaluating the implications of a chain of multiple options in the presence of uncertainty.

Influence diagram

A graphical representation of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes.

Probability and impact matrix

A grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs.

Risk category

A group of potential causes of risk.

Risk breakdown structure (RBS)

A hierarchical representation of potential sources of risks.

Tornado diagram

A special type of bar chart used in sensitivity analysis for comparing the relative importance of variables.

Uncertainty

Unknowable events, also called the "unknown unknowns."

Risk Response Planning

process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks.

Residual risk

A risk that remains after risk responses have been implemented.

Threat

A risk that would have a negative effect on one or more project objectives.

Opportunity

A risk that would have a positive effect on one or more project objectives.

Risk report

A project document developed progressively throughout the Project Risk Management processes, which summarizes information on individual project risks and the level of overall project risk.

Reserve

A provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g., management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.

Risk register

A repository in which outputs of risk management processes are recorded.

Risk mitigation

A risk response strategy whereby the project team acts to decrease the probability of occurrence or impact of a threat.

Risk avoidance

A risk response strategy whereby the project team acts to eliminate the threat or protect the project from its impact.

Risk exploiting

A risk response strategy whereby the project team acts to ensure that an opportunity occurs.

Risk enhancement

A risk response strategy whereby the project team acts to increase the probability of occurrence or impact of an opportunity.

Risk sharing

A risk response strategy whereby the project team allocates ownership of an opportunity to a third party who is best able to capture the benefit of that opportunity.

Risk acceptance

A risk response strategy whereby the project team decides to acknowledge the risk and not take any action unless the risk occurs.

Risk transference

A risk response strategy whereby the project team shifts the impact of a threat to a third party, together with ownership of the response.

Risk escalation

A risk response strategy whereby the team acknowledges that a risk is outside of its sphere of influence and shifts the ownership of the risk to a higher level of the organization where it is more effectively managed.

Fallback plan

Alternative set of actions and tasks available in the event that the primary plan needs to be abandoned because of issues, risks, or other causes.

Risk exposure

An aggregate measure of the potential impact of all risks at any given point in time in a project, program, or portfolio.

Sensitivity analysis

An analysis technique to determine which individual project risks or other sources of uncertainty have the most potential impact on project outcomes, by correlating variations in project outcomes with variations in elements of a quantitative risk analysis model.

Simulation

An analytical technique that models the combined effect of uncertainties to evaluate their potential impact on objectives.

Trigger condition

An event or situation that indicates that a risk is about to occur.

Risk

An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives; also called the "known unknowns."

Risk categorization

Organization by sources of risk (using the RBS), the area of the project affected (using the WBS), or other useful category to determine the areas of the project most exposed to the effects of uncertainty.

Contingent response strategies

Responses provided which may be used in the event that a specific trigger occurs.

Hierarchical charts

Risks have been categorized using more than two parameters; also called bubble charts.

Risk data quality assessment

Technique to evaluate the degree to which the data about risks is useful for risk management.

Overall project risk

The effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks, representing the exposure of stakeholders to the implications of variations in project outcome, both positive and negative.

Risk threshold

The level of risk exposure above which risks are addressed and below which risks may be accepted.

Risk owner

The person responsible for monitoring the risks and for selecting and implementing an appropriate risk response strategy.

Contingency reserve

Time or money allocated in the schedule or cost baseline for known risks with active response strategies.

Risk Planning

The process of defining how to conduct risk management activities for a project.

Risk Identification

The process of identifying individual risks as well as sources of overall risk and documenting their characteristics.

Quantitative Risk Analysis

The process of numerically analyzing the effect of identified individual project risks and other sources of uncertainty on overall project objectives.

Qualitative Risk Analysis

The process of prioritizing individual project risks for further analysis or action by assessing their probability of occurrence of each risk and its impact on project objectives if that risk occurs.

Risk appetite

degree of uncertainty entity is willing to take on in anticipation of a reward.