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.
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.
Recommended Project Management Software
If you’re interested in learning more about top rated project management software, the editors at Project-Management.com actively recommend the following:
1 Wrike
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Tackle complex projects with Wrike’s award-winning project management software. Break projects into simple steps, assign tasks to team members, and visualize progress with Gantt charts, Kanban boards, and calendars. Manage resource allocation and forecasting with software that’s easy to launch. Automation and AI features strip away time-consuming admin tasks so you can do the best work of your life. Streamline your practices, align your team, and ensure you hit deadlines and stay on budget.
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2 monday.com
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monday.com Work OS is the project management software that helps you and your team plan, execute, and track projects and workflows in one collaborative space. Manage everything from simple to complex projects more efficiently with the help of visual boards, 200+ ready-made templates, clever no-code automations, and easy integrations. In addition, custom dashboards simplify reporting, so you can evaluate your progress and make data-driven decisions.
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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 ...