## Assessing and Mitigating Risk

On each of these second-level items, the first question is, "Does it apply?" If the answer is yes, then describe the potential risk event. For each event, you then need to assess the potential effect on schedule, cost, resources, deliverables, technical objectives, and commercial objectives. The potential effect is the product of two estimates. First, what is the probability that the event will occur? Second, what is the impact of the event if it does happen?

Finally, you consider options for containing the risks. Look for options to reduce the probability of risk occurrence and minimize the impact of risk events should they occur.

Steps in Dealing with Risk Issues

1. Determine the probability of the event.

• Consider the ability to reduce probability.

• Can you insure, find an alternative, or reduce the risk?

2. Determine the impact of the event.

• Consider the ability to reduce the impact.

• Can you insure, find an alternative, or reduce the risk?

3. What is the cost to mitigate the risk?

4. What is the ability to absorb the impact?

• Consider schedule contingency, cost contingency, and the design margin, for example.

5. Can the impact be shifted to others?

• Consider cost plus, extras, or that the client or sponsor might accept a lesser product.

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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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