What are the seven common characteristics of risk?

1. Situational

Changes in a situation can result in new risks. Such changes include replacing a team member, undergoing a reorganization, changing the scope of the project.

Table of Contents Show

1. Situational
2. Time-based
3. Interdependence
4. Magnitude Dependent
5. Value-Based
Recommended Project Management Software
2 monday.com
Characteristics of an Ideally Insurable Risk
Large Number of Exposure Units
What are the characteristics of risks?
What are the 7 principles of risk management?
What are common characteristics of risk management?
What are the characteristics of risk in insurance?

2. Time-based

In this case, the probability of the risk occurring at the beginning of the project is very high (due to the unknown factor), and diminishes along as the project progresses. In contrast, the impact (cost) from a risk occurring is low at the beginning and higher at the end.

3. Interdependence

Within a project, many tasks and deliverables are interdependent on each other. These delays in these tasks will have a cascading effect on the other related tasks, and the result could be a domino effect.

4. Magnitude Dependent

The relationship between probability and impact is not linear in this case, and the magnitude of the risk makes a lot of difference. For example, consider the risk of spending $1 for a 50/50 chance to win $5 versus the risk of spending $1000 for a 50/50 chance of winning $5000. Since the probability of loss is the same in both cases (50%), the opportunity cost of losing is much greater in the latter case.

5. Value-Based

The risk may be affected by personal, corporate or cultural values. For example, completing a project on schedule may be dependent on the time of the year and the nationalities or religious beliefs of the work team. Projects being done in international locations where multiple cultures are involved may have a higher risk than those done in a single location with a similar kind of workforce.

About Abhilash Gopi In his own words

I got smitten by the Project Management bug when I was working under K.U. Harsha, my first Project Manager and have been lucky since then to work under democratic managers (Purushottam Sitla, Rekha Varma). I could learn on-job from these wonderful managers and has been equally successful in applying these principles.

I am currently working as a Senior Test Manager with Cordiant Technologies, Kochi, India. Cordiant (www.cordiant.com) is an Offshore Development Services provider for ISVs and Web Startups and its innovation is spearheaded by our President & CEO, Dennis Paul.

To learn more about Project Management, check out TechRepublic Academy.

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1 Wrike

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Characteristics of an Ideally Insurable Risk

Private insurers generally insure only pure risks. However, some pure risks are not privately insurable. From the viewpoint of a private insurer, an insurable risk ideally should have certain characteristics. There are ideally six characteristics of an insurable risk:

There must be a large number of exposure units.
The loss must be accidental and unintentional.
The loss must be determinable and measurable.
The loss should not be catastrophic.
The chance of loss must be calculable.
The premium must be economically feasible.

Large Number of Exposure Units

The first requirement of an insurable risk is a large number of exposure units. Ideally, there should be a large group of roughly similar, but not ...