The Impact Of Risk Handling Measures

Most project management methodologies include risk management, which can be used to:

• Create an understanding of the potential risks and their effects

• Provide an early warning system when the risk event is imminent

• Provide clear guidance on how to manage and contain the risk event, if possible

• Restore the system/process after the risk event occurs

• Provide a means for escape and rescue should all attempts fail

Some guidance in risk management is necessary because each stakeholder could have a different tolerance for risk. Risk and safety system policies, procedures, and guidelines exist primarily for the lower three levels in Figure 17-16. The customer's tolerance for risk could be significantly greater or less than the company's tolerance. Also, based upon the project's requirements, any given project could be willing to accept significantly more or less risk than the organizational procedures normally allow.

The project management methodology may very well dictate the magnitude of the risk handling measures to be undertaken. The risk handling measures for risk assumption may be significantly more complex than measures for avoidance. Figure 17-17 shows the extent of the risk handling strategy versus the magnitude of the risks. As the magnitude of the risk increases, an overreaction may occur that places undue pressure on the risk management process and the project management methodology. The cost of maintaining these risk handling measures should not overly burden the project. Excessive risk management procedures may require that the project manager spend more time and money than appropriate.

PROJECT'S TOLERANCE

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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