Definition: The systematic process of identifying, analyzing, and evaluating potential risks that could negatively impact a project’s cost, schedule, or performance.
Key Components:
- Risk Identification: Detecting possible risk factors.
- Risk Analysis: Evaluating the likelihood and impact of identified risks.
- Risk Mitigation Planning: Developing strategies to minimize potential risks.
Use Cases/Industries:
- Engineering: Assessing safety risks in structural designs.
- Finance: Evaluating investment risks in portfolios.
- Healthcare: Identifying potential hazards in medical procedures.
Advantages:
- Proactive Management: Addresses issues before they escalate.
- Improved Decision-Making: Provides data-driven insights for planning.
- Resource Optimization: Allocates resources effectively to manage risks.
Challenges:
- Uncertainty: Not all risks can be anticipated.
- Complexity: Involves analyzing numerous potential scenarios.
- Resource Intensive: Requires time and expertise to conduct thoroughly.
Related Terms: Risk Management, Contingency Planning, Threat Analysis
Example: An energy company conducts a risk assessment before launching a new offshore drilling project to identify environmental and safety hazards.
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Synonyms:
Risk Analysis, Hazard Evaluation, Threat Assessment
