Essence of Risk

Risk refers to an uncertain event that affects the objective of a project that is about to start and includes results and extent of influence it may cause. Such results and influence do not necessarily mean unfavorable ones but risk may bring favorable results. Uncertainty surrounding a project is classified as shown in Figure 4-7-2.

Figure 4-7-2: Uncertainty

Figure 4-7-2: Uncertainty

As shown in Figure 4-7-3, risk is also classified into various types from diversified viewpoints such as internal risk, external risk, dynamic risk, static risk, pure risk, and speculative risk.

Internal risk: Risk within the scope where a project team can extend control and influence.

(risk on personnel securing, cost estimate, etc.) External risk: Risk out of the scope where a project team can exercise control and exert influence. (risk on market trends, government policy, etc.)

Static risk: Risk related to acts of God, or damage caused by human error and crime.

Dynamic risk: Risk related to changes, particularly changes in human desires and development of machinery and organizations.

Pure risk: Risk in a case that has no interest but damage only. Speculative risk: Risk in a case that has both interest and damage.

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