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Areas of risk management | ||
As applied to corporate finance, risk management is a technique for measuring, monitoring and controlling the financial or operational risk on a firm's balance sheet. See value at risk. The Basel II framework breaks risks into market risk (price risk), credit risk and operational risk and also specifies methods for calculating capital requirements for each of these components. Enterprise Risk ManagementIn Enterprise Risk Management, a risk is defined as a possible event or circumstance that can have negative influences on the In addition, every probable risk can have a pre-formulated plan to deal with its possible consequences (to ensure contingency if the risk becomes a liability). From the information above and the average cost per employee over time, or Cost Accrual Ratio, a project manager can estimate * the cost associated with the risk if it arises, estimated by multiplying employee costs per unit time by the estimated time lost (cost impact, C where C = Cost Accrual Ratio * S) * the probable increase in time associated with a risk (schedule variance due to risk, Rs where Rs = P * S): o Sorting on this value puts the highest risks to the schedule first. This is intended to cause the greatest risks to the project to be attempted first so that risk is minimized as quickly as possible. o This is slightly misleading as schedule variances with a large P and small S and vice versa are not equivalent. (The risk of the RMS Titanic sinking vs. the passengers' meals being served at slightly the wrong time). * the probable increase in cost associated with a risk (cost variance due to risk, Rc where Rc = P*C = P*CAR*S = P*S*CAR) o sorting on this value puts the highest risks to the budget first. o see concerns about schedule variance as this is a function of it, as illustrated in the equation above. Risk in a project or process can be due either to Special Cause Variation or Common Cause Variation and requires appropriate treatment. That is to re-iterate the concern about extremal cases not being equivalent in the list immediately above. Risk management activities as applied to project managementIn project management, risk management includes the following activities: * Planning how risk management will be held in the particular project. Plan should include risk management tasks, responsibilities, activities and budget. * Assigning a risk officer - a team member other than a project manager who is responsible for foreseeing potential project problems. Typical characteristic of risk officer is a healthy skepticism. * Maintaining live project risk database. Each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. * Creating anonymous risk reporting channel. Each team member should have possibility to report risk that he foresees in the project. * Preparing mitigation plans for risks that are chosen to be mitigated. The purpose of the mitigation plan is to describe how this particular risk will be handled – what, when, by who and how will be done to avoid it or minimize consequences if it becomes a liability. * Summarizing planned and faced risks, effectiveness of mitigation activities and effort spend for the risk management. Copyright 2008 - France BtoB from Wikipédia
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• Baseline II : control and applicability • Timesheet • Contingent work • Duties of the directors • Boston Consulting Group's Advantage&hellip • Best practices | |
