Understanding Key Risk Management Principles and PMI s Risk Management Philosophy

Understanding Key Risk Management Principles and PMI's Risk Management Philosophy

PMI's risk management philosophy is based on a proactive approach to preventing negative risks and enhancing positive risks. Key points to remember about risk include

• Risk can be either positive or negative. Positive risks are opportunities, negative risks are threats.

• A risk breakdown structure (RBS) is used to organize risk in a hierarchical structure.

• Monte Carlo analysis is a technique using simulations and probability in determining quantitative risk analysis.

• Risk categories are important in classifying risk.

• Probability and impact are both needed to assess risks.

• Quantitative analysis is generally reserved for high-probability, highimpact risk.

• Risk management planning and risk response planning are not the same activities.

• Risk identification is an iterative process that is performed throughout the project, not just during planning.

• Decision tree analysis is a technique using probabilities and costs for structured decision making.

• Five of the six risk management processes are conducted during the planning process group.

• The risk register is an important tool for capturing and tracking risks.

Risk register is a term introduced by PMI for the document detailing information on risks.

A risk can have either a negative or positive impact on the project.