9.8. Key Terms
Key Terms
- Contingency Plans: The project risk plan balances the investment of the mitigation against the benefit for the project. The project team often develops an alternative method for accomplishing a project goal when a risk event has been identified that may frustrate the accomplishment of that goal.
- Risk Avoidance: This usually involves developing an alternative strategy that has a higher probability of success but usually at a higher cost associated with accomplishing a project task.
- Risk Management: The process of identifying, quantifying, and managing the risks that an organization faces.
- Risk Reduction: This is an investment of funds to reduce the risk on a project. On international projects, companies will often purchase the guarantee of a currency rate to reduce the risk associated with fluctuations in the currency exchange rate.
- Risk Sharing: Involves partnering with others to share responsibility for risky activities. Or, hiring someone else to take on that part of the project.
- Risk Transfer: A risk reduction method that shifts the risk from the project to another party. The purchase of insurance on certain items is a risk-transfer method.
