Read e-book online A Blueprint. Corporate Governance PDF

By Fred R. Kaen

ISBN-10: 081440586X

ISBN-13: 9780814405864

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Example text

Although that observation has limited utility in project management, it does distinguish between risk and uncertainty. With risk, there is a sense of the relative level of event probability. With uncertainty, however, that probability is completely unknown. To understand whether an event is truly “risky,” the project manager must understand the potential effects resulting from its occurrence or nonoccurrence. Determining risk in this manner requires judgment. For example, although an event may have a low likelihood of occurring, the consequences, if it does occur, can be catastrophic.

Determining risk in this manner requires judgment. For example, although an event may have a low likelihood of occurring, the consequences, if it does occur, can be catastrophic. A commercial airline flight illustrates this type of situation: Although the probability of a crash is low, the consequences are generally grave. Although many people feel uncomfortable about flying because of the consequences of failure, most people do not consider flying a high risk. This example also emphasizes the principle that risk greatly depends on individual perception.

Again, project managers who generate their own risk breakdowns or taxonomies would be prudent to consider the potential efficacy of such an effort. Risk Facets The original Risk Management: Concepts and Guidance (Defense Systems Management College 1986) classified risk into five facets: • Technical (performance related): Appendix B contains an abbreviated list of technical risk areas. It does not list the types of risks by processes, components, parts, subassemblies, 12 • • • • Risk M a n ag em en t assemblies, subsystems, and systems for all the many associated integration design tasks.

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A Blueprint. Corporate Governance by Fred R. Kaen

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