6.8. 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. 6.4

Risk Acceptance: Involves partnering with others to share responsibility for risky activities. Or, hiring someone else to take on that part of the project. 6.3

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. 6.3

Risk Breakdown Structure (RBS): A risk breakdown structure organizes the risks that have been identified into categories using a table with increasing levels of detail to the right. 6.3

Risk Management: The process of identifying, quantifying, and managing the risks that an organization faces. 6.2 

Risk Mitigation (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.  6.3

Risk Register: A list of all the risks that have been previously identified. 6.3

Risk Transfer (or sometimes shared): 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. 6.3