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Managing Risk: Improving the Business Process

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Managing Risk: Improving the Business Process
Chapter 7 – Managing Risk
Posted on October 6, 2013 by Eko Budiono Tedjo • Posted in Uncategorized • Tagged Budget, Change control, Contingency plan, Project management, Project manager, Risk, WBS, Work breakdown structure • Leave a comment

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Question 1

1. Project risks can/cannot be eliminated if the project is carefully planned. Explain.

Project risks cannot be eliminated. It is impossible to be aware of all things that might happen when a project is being implemented. Undesirable events identified before the project begins can be transferred, retained/reduced, or shared. Contingency plans with trigger points and responsibility should be established before the project begins.

2. The chances of risk events occurring and their respective costs increasing change over the project life cycle. What is the significance of this phenomenon to a project manager?

The chances of risk events and estimated costs changing over the project life cycle are high. These events will impact project change control mechanisms. Moreover, such changes could be significant enough to require changes in scope. The project manager must ensure that these changes are recorded and kept updated. Otherwise the integrity of the project control system will quickly deteriorate and become useless as a management tool.

3. What is the difference between avoiding a risk and accepting a risk?

Avoiding a risk is changing the project plan in advance so as to eliminate specific risks from occurring while accepting a risk means no preventive action is taken; contingency plans may be used if the risk materializes.

4. What is the difference between mitigating a risk and contingency planning?

Mitigating a risk refers to taking action to either reduce the likelihood that a risk (bad event) will happen and/or reduce the impact the risk has on the project. Contingency planning is developing a response if the risk occurs. Mitigating is
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