6.8. Key Terms
Key Terms
- Contingency fund: This is a number of resources set aside to cover unanticipated costs.
- Contingency plan: A contingency plan defines alternate paths for the project in case various risks are realized.
- Risk: is potential loss or harm (Canadian Tourism Commission [CTC], 2003a). This could be a financial loss, damage to property, or injury to workers or guests.
- Risk assessment: includes both the identification of potential risks and the evaluation of the possible impact of the risk.
- 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 mitigation plan: is designed to eliminate or minimize the impact of the risk events—occurrences that hurt the project.
- 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.
“9.8. Key Terms” from Essentials of Project Management by Adam Farag is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. Modifications: added risk, act, regulation.
