Principles and Concepts

This article contains most of the important terms and concepts of risk management in order to answer questions related to this topic in the PMI-RMP Exam, I recommend you review this type of articles 1 week before your exam date, all information mentioned are based on PMBOK Guide 5th edition , Practice Standard for Risk Management and  Risk Management Tricks of the trade for Project Managers and PMI-RMP Exam Prep Guide , 2nd Edition by Rita Mulcahy .

 

  • Project background Information , Information from before the project was approved , articles written about similar projects and other such information.
  • Assumptions, Factors that are considered to be true without any proof for planning purposes only , they are part of progressive elaboration as they should be reassessed during project life cycle, they contain a degree of risk.
  • Benefit , Positive effect on project opportunity arising from occurrence of an opportunity.
  • Bias, In some cases the source of information exhibit a preference that inhibits a partial prejudgment , they are cognitive and motivational bias.
  • Cause, Events which might give rise into risks.
  • Impact, Measure of the effect of a risk on one or more objectives if it occurs.
  • Constraint , Things which limits team options , an applicable restriction or limitation, either internal or external.
  • Contingency Reserve, Amount of funds , budget or time needed above the estimate to reduce the risk of overruns of project objectives.
  • Contingency Plan, Plan developed in anticipation of occurrence of risk , to be executed if predetermined risk occurs.
  • Decision Tree analysis, Diagram which describes a decision under consideration of choosing one or another alternative, used when future scenarios are uncertain.\
  • Risk management Department, Department that supplies policies and assistance with risk management efforts.
  • Effect, Future event which would directly affect one or more of the project objectives.
  • Risk, Uncertain event or condition that if occurred will affect project objectives in a positive or negative way.
  • Risk Rating, a number between 1 and 10 chosen to evaluate the probability and impact of a risk .
  • Risk Score, Multiply of probability by impact, gives numerical value of each risk .
  • Project risk score, sum of individual risk scores.
  • Risk ranking within a project, Individuals risks comparison within a project.
  • Risk ranking compared to other projects , Risk score of project compared to risk score of other projects.
  • Emergent risk, risks which arise later on in a project and which was not identified earlier.
  • Identify Risks , the process of determining which risks may affect project objectives.
  • Risk Review , Looks forward in time to ensure existing risk response plans are adequate.
  • Risk Audit, Evaluates the effectiveness of teams risk management efforts.
  • Risk Trigger, Indications that an identified risk is about to occur.
  • Issue, a problem which have a negative effect on a project objective arising from occurrence of a threat.
  • Probability , Likelihood or a measure of how likely an individual risk is to occur .
  • Monte Carlo analysis, Technique that computes the project cost or schedule many times using input value selected randomly to calculate the possible total project cost and completion dates.
  • Objective, Something toward a project is directed , purpose to be achieved or a result to be obtained.
  • Opportunity, Positive set of events or a risk that if occurred will have a positive impact on project objectives.
  • Overall Project Risk, Represents the effect of uncertainty on the project as a whole , It is the sum of individual risks and it represents the exposure of Stakeholders to the variations in project outcome.
  • Response strategy, high level approach to address an individual risk broken into set of risk actions.
  • Risk Action, Detailed task which implements in whole or in part a response strategy in order to address an individual risk.
  • Risk Owner, Person responsible to ensure appropriate risk strategy is selected and implemented , and for determining suitable risk actions.
  • Risk Action Owner, Person responsible of carrying out the approved risk actions for responding to given risk , known also as “Response owner”
  • Risk Attitude, chosen mental toward uncertainty, familiar risk attitudes are Risk averse, Risk tolerant , risk neutral , risk seeking and risk prone.
  • Risk breakdown structure, hierarchy of the identified project risks arranged by risk category.
  • Risk Category, Group of potential causes of risk , groups such as technical , external , environmental , organizational.
  • Risk Exposure, Measure of overall project risk describing the overall effect of identified risks on project objectives.
  • Risk Metalanguage, Structural description of risk which separates Cause, effect and risk .
  • Risk Model, Representation of the project including data about project risks that can be analyzed by quantitative methods.
  • Risk Register, Document containing the results of Identify risk , qualitative and Quantitative risk analysis processes and plan risk response, mentions all identified risks with detailed description.
  • Risk Thresholds , measure of the level of risk exposure above which action must be taken.
  • Root Cause, Initiating cause that give rise to casual chain which may give rise to risks.
  • Secondary Risk, Risk that arise a direct result of implementing a risk response.
  • Threat , Negative Condition or situation , a risk that will have a negative effect on project objectives if it occurs.
  • Assumption Testing , Looking at the stability of each assumption , ususally held in perform qualitative risk analysis process.
  • Accept , Do nothing , passive acceptance that requires a workaround , Active acceptance that requires a contingency plan.
  • Avoid , Eliminate the threat by eliminating the cause.
  • Bar Chart , Chart showing activity information , it usually includes risk score and owner.
  • Cognitive Bias, Bias due to differences in perception .
  • Motivational bias, Bias due intentionally to one direction or another.
  • Business risk , risk of gain or loss .
  • Pure Risk , Risk of loss only , usually needs insurance.
  • Data Quality Assessment, Determining how will a risk is understood.
  • Ensure Compliance , Make sure polices, procedures and plans are being followed.
  • Enhance, Increase the probability or impact of an opportunity.
  • Expected Monetary Value , Probability weighted average of all possible outcomes .
  • Exploit , Increase the opportunity by making the cause more probable.
  • Fallback Plan, Planned actions to be taken if the risk happens and contingency plans were not effective.
  • Tracking, How records of risks will be documented for the benefit of current and future projects.
  • Workarounds, Unplanned responses to unidentified risks that occur.
  • Transfer, assign the risk to someone else by subcontracting.
  • Share, Retain appropriate opportunities or parts instead of transferring to others.
  • Go/ No Go Decisions, Is the project too risky to continue compared to potential benefits.
  • Risk tolerance Area, Areas at which key stakeholders are willing to accept risk.
  • Insurance, Assigns the liability for a risk to someone else.
  • Management Reserves, amount of time or cost added to the project to deal with unknown unknowns or risks were not identified.
  • Methodology, How risk will be handled on the project and what data and tools will be used.
  • Metrics, Standards of performance that once evaluated, tell how work is performed against plan.
  • Risk Reassessment, looking for new risks when changes are made on the project.
  • Risk Reserve Report, Running balance of remaining of the reverse.
  • Mitigate, Reduce the expected monetary value of a threat by reducing its impact or probability.
  • Pre Mortem, theoretical evaluation of a project before it has actually been done.
  • Prompt list , Generic list of risk categories.
  • Residual Risks, risks which remain after risk response planning.
  • Risk governance , Oversight of the entire risk management process.


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