What is a Risk?
A risk is an uncertain event that could have a positive or negative effect on your project
- If there is a 0% chance of an event occurring, there is no risk (example; there is a 0% chance your project will be adequately funded, this is not a risk, it is a reality)
- If there is a 100% chance of an event occurring, this would be an issue, not a risk
- Risks with negative consequences are called threats
- Risks with positive consequences are called opportunities (Yes, risk can be good! Stop thinking of risk as bad, and start thinking of it in terms of probabilities!)
Types of Risk:
Risks can be broken out into two primary types
- Pure Risk (hazard)– risk with potential loss only ex. Fire, theft, personal injury
- Business Risk (speculative risk) – risk with potential loss or gain ex. A highly skilled employee becomes available to work on your project, reducing your schedule time, the tax rate changes, a new server costs less (or more) than you budgeted for
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