Risk Management Options

management as a shared or centralized activity mustany option is usually just an issue of schedule and
accomplish the following tasks: identity concerns;funding.)
identify risks & risk owners – evaluateAvoidance: Use an alternate approach that does not
the risks as to likelihood and consequences; assesshave the risk. This mode is not always an option.
the options for accommodating the risks; prioritizeThere are programs that deliberately involve high
the risk management efforts; develop riskrisks in the expectation of high gains. However, this is
management plans; authorize the implementation ofthe most effective risk management technique if it
the risk management plans; track the riskcan be applied.
management efforts and manage accordingly. It isControl: Controlling risks involves the development of
possibilities that are being accommodated. It isa risk reduction plan and then tracking to the plan.
management's job to do the planning that willThe key aspect is the planning by experienced
accommodate the possibilities. The customer is thepersons. The plan itself may involve parallel
final judge, but internal goals should be to a higherdevelopment programs, etc.
level than customer expectations.Assumption: Simply accepting the risk and proceeding.
The key words in risk management are: proactive;However, there can be a tendency within
management; accommodate; acceptably; professional;organizations to gradually let the assumption of a risk
possibility. The need for new risk assessment andtake on the aura of a controlled risk.
management techniques is required to continuouslyRisk Transfer: Means causing another party to accept
track down potential and critical risks, and to developthe risk, typically by contract or by hedging. Liability
strategies for handling these risks, for example: duringamong construction or other contractors is often
product development. It is obvious that without atransferred this way.
strong risk management plan as part of the process,Knowledge & Research: This mode is not "true"
a company will waste time, money, and resources,risk handling, but rather a technique for strengthening
and will fail to manage the projects correctly.other techniques. This approach can best be viewed
Risk management is the sum of all proactiveas an adaptation of the approach used by a student
management-directed activities within a program thatwriting a thesis: intensive study with specialized
are intended to acceptably accommodate thetesting – in other words doing your
possibility of failures in the elements of a program.homework.
From an organization's perspective a failure isNever expect initial risk management plans to be
anything accomplished in less than a professionalperfect. Practice, experience, and actual loss results
manner and/or with a less-than-adequate result.will dictate changes in the plan to allow different
Risk Management Optionsdecisions to be made in dealing with the risks being
Risk management options are usually cited as riskfaced. In order for companies to succeed in the
handling options subdivided as: avoidance, control,twenty-first century, they need to excel in all
assumption, risk transfer, and knowledge andaspects of their business, which includes risk
research. Generally, the assessment of managementmanagement, so they can fulfill their own and their
options is a hip shot since the necessary decisionscustomer’s goals.
must occur early in a program when things are stillConclusion
fuzzy. However, if experienced personnel are givenRisk management is an on-going process, and is a
the facts, one can expect very good decisions sincecombination of proactive management-directed
there is seldom any real mystery about theactivities within a program that are intended to
practicality of options available. (The practicality ofaccommodate the possibility of failures.