Video on Managing Risk

Questions on Video

2 types of risk ?2 types of loss?4 approaches to risk?Examples?

Types of RiskSpeculative

Gain/loss

For business decisions – invest or not

Pure

Only a loss

E.g. fire, collapse of a tent

Can be reduced by management action

3Information Technology Project Management, Fifth Edition, Copyright 2007

Types of LossDirect

E.g. Key employee dying

Indirect

Can be 4 times the size the direct effect

E.g. shutdown the business, hire new employees

4Information Technology Project Management, Fifth Edition, Copyright 2007

4 Approaches to RisksAvoid

Stop producing an aircraft

Eliminate fireworks

Reduction

Sprinkler systems

Quality checks

Risk assessments

Safety nets beneath high-wire acts

5Information Technology Project Management, Fifth Edition, Copyright 2007

4 Approaches to Risks (Cont’d)Assumption

Can be on purpose/by accident

If by accident, can be devastating, e.g. asbestos

Planned risk retention by management reserve

Establish a veteran fund for retired performers

Transfer

Contractual obligations

Purchase insurance to cover key performers

6Information Technology Project Management, Fifth Edition, Copyright 2007