- Year not given
Risk
Short answer
A risk is an uncertain event or condition with a positive or negative effect on project objectives. It has probability and impact; risk exposure equals probability times impact. It differs from an issue (already occurred). Example: 20% chance of server failure causing Rs 5,00,000 loss yields EMV Rs 1,00,000.
What do you mean by risk?
A risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost and quality (PMBOK). Schwalbe: risk is the possibility of loss or injury; project risk includes both negative (threats) and positive (opportunities) risks.
Key points
- Uncertainty: it may or may not happen.
- Cause and effect: has a cause (condition) and, if it occurs, an impact.
- Probability and impact: Risk exposure = probability × impact.
- Negative risk (threat) and positive risk (opportunity).
- Risk differs from an issue, which has already occurred.
Types of risk
| Type | Examples |
|---|---|
| Technical | New technology failure, performance shortfall |
| Management | Poor planning, communication |
| Organisational | Funding cut, priorities change |
| External | Law change, supplier failure, disaster |
| Market | Competitors, demand |
| Financial | Cost overrun, exchange rate |
Risk attributes
- Event, probability (0-1 or low/medium/high), impact, timing, and risk owner.
Risk exposure example
Probability of server failure 20%, loss Rs 5,00,000. Expected monetary value = 0.2 × 5,00,000 = Rs 1,00,000.
Risk management process
Plan -> Identify -> Qualitative -> Quantitative
-> Plan responses -> Monitor and control
Risk tolerance
Different stakeholders have different attitudes: risk-averse, risk-neutral and risk-seeking.
Example: In a mobile banking project, a risk is "payment gateway API changes during development", which could delay the schedule by a month.
✓ Answer checked by Claude Opus 5.5 (high effort)
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