Monday, July 26, 2010

What Is Risk Management?

Risk management requires the management of uncertainty.


The more uncertainty there is in an activity the greater the difficult in managing towards a successful completion.

It is fair to say that anything that can AFFECT the PERFORMANCE of the product would constitute a RISK.

However, this event would need to be UNCERTAIN and have a SIGNIFICANT impact.

Naturally, if the affect was insignificant the risk could be largely ignored and if certain the event would constitute part of the main plan and not a contingency.

When something goes wrong and there is no 'plan' in place to tackle it you are into CRISIS management. It's possible that you may get away with this on occasion but regular crisis management will cause a lot of problems, as well as draining morale. If effective risk management fails it is likely that crisis management will come to the fore.

Potential risk treatments

Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major categories:

* Avoidance (eliminate, withdraw from or not become involved)
* Reduction (optimise - mitigate)
* Sharing (transfer - outsource or insure)
* Retention (accept and budget)

Source: Risk Management-Basic, wikipedia

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