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Risk Management Knowledgebase

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CBA Cost Benefit Analysis can provide an assessment of how much an organisation wants to devote to reducing the risks given its resources and competing demands.
Cost benefit analysis quantifies in monetary terms as many of the costs and benefits of a proposal as feasible, including items for which the market does not provide a satisfactory measure of economic value.
CEA Cost Effectiveness Analysis can help determine where and how best to deploy the resources available for reducing risk and preventing harm.
Categories Common categories or groupings of risks are:
Political - Change of government, cross cutting policy decisions (e.g. the Euro).
Professional - Associated with the nature of each profession.
Economic - Ability to attract and retain staff in the labour market; exchange rates affect costs of international transactions; effect of global economy on UK economy.
Socio cultural - Demographic change affects demand for services; stakeholder expectations change.
Health and Safety - Buildings, vehicles, equipment, fire, noise, vibration, asbestos, chemical and biological hazards, food safety, traffic management, stress, lone working, etc.
Technological - Obsolescence of current systems; cost of procuring best technology available, opportunity arising from technological development.
Contractual - Associated with the failure of contractors to deliver devices or products to the agreed cost and specification.
Environmental - Buildings need to comply with changing standards; disposal of rubbish and surplus equipment needs to comply with changing standards.
Physical - Theft, vandalism, arson, building related risks, Storm, flood, other related weather, damage to vehicles, mobile plant and equipment.
Operational - Relating to existing operations both current delivery and building and maintaining.
Change Control Project change control methods aim to ensure that the impact of any change is well understood, carefully considered, and consciously approved, rather than executed as adhoc changes that could jeopardise success.
Change Control. The procedure to ensure that all changes are controlled, including the submission, analysis, decision making, approval, implementation and post implementation of the change.
Change Management Managing change refers to the making of changes in a planned and managed or systematic fashion. The aim is to more effectively implement new methods and systems in an ongoing organisation.
Chart of Accounts A numbering system, usually based on corporate chart of accounts of the primary performing organisation, used to monitor costs by category.
Compliance Conforming to a specification, standard or law that has been clearly defined.
Compound Risk A risk made up of a number of inter-related risks.
Conflict Management The ability to manage conflict effectively.
Constraints Applicable restrictions that will affect the scope of the project.
Contingency Planning This an important element of control measures as it is the means by which organisations plan for business continuity / recovery after events which they could not control.
By their nature, risks may or may not materialise and their impacts may vary from expectations.
Contingency planning can be important to ensure that all (or the most important and representative) eventualities can be adequately addressed.
Continuous Risk Identification This is necessary to identify new risks which did not previously arise, changes in existing risks, or risks which did exist ceasing to be relevant to the organisation.
Control Charts Control charts display the results, over time, of a process. They are used to determine if the process is in need of adjustment.
Control Measures The purpose of control measures is that whilst continuing within the organisation with the activity giving rise to the risk, action (control) is taken to constrain the risk to an acceptable level.
Typical measures might include improvement in areas of Management; Planning; Reporting; Communications; Monitoring; Audit; Safety; Procedures; Policies; Standards; Equipment; I.T., Resources; Training; and, Support.
In designing control, it is important that the control put in place is proportional to the risk.
Apart from the most extreme undesirable outcome (such as loss of human life) it is normally sufficient to design control to give a reasonable assurance of confining likely loss.
Every control action has an associated cost and it is important that the control action offers value for money in relation to the risk that it is controlling.
Generally speaking the purpose of control is to constrain risk rather than to eliminate it.
Cost Benefit Analysis The analysis of the potential costs and benefits of a project to allow comparison of the returns from alternative forms of investment.
Cost Management The effective financial control of the project through evaluating, estimating, budgeting, monitoring, analysing, forecasting and reporting the cost information.
Cost Variance The difference between the budgeted and actual cost of work performed.
Countermeasure An action or process that is currently in place to contain a risk to an acceptable level or to reduce the threat.
Counterparty Risk The risk that the other party to the specific transaction will not fulfil its contractual obligations.
Critical Path Series of consecutive activities that represent the longest path through the project.
Critical Success Factor(CSF) A measure of success or maturity of a project or process. It can be a state, a deliverable or a milestone. An example of a CSF would be 'the production of an overall technology strategy'.

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