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Risk Attitudes and Tolerances

April 17, 2011

In order to manage project risk, we must understand our organization’s risk attitudes and tolerances.  Unfortunately few organizations define their official stance on risk, which requires us to assess the prevailing risk attitudes and tolerances and determine their effect on our projects and programs.  Assessing risk attitudes and tolerances is tricky.

An organization’s approach to risk is deeply affected by the organization’s strategic objectives, the risk attitudes and tolerances of its leadership, as well as a variety of internal and external factors.  I am always amazed by the variations in organizations’ attitudes towards risk.  I have managed projects and programs in organizations where risk was not acknowledged or planned for.  Rather dangerous approach!

The goal of risk management is not to eliminate risk, (that is impossible) rather to identify, plan for and manage risk.  By making all our stakeholders aware of risk and partnering with them to control those risks, we safeguard our organizations and our projects and improve our abilities to complete projects on time, on budget, within scope  and meet our stakeholders expectations.

Found some good resources about risk attitudes and tolerance, I have listed the links below:

Understanding and Managing Risk Attitudes

Understanding Risk Attitude and Tolerance

Other Project Risk Management Posts:

Risky Business – No Ostriches Allowed – Part 1 – Identifying Project Risks

Risky Business – No Ostriches Allowed – Part 2 – Using PMBOK’s Process Groups and Knowledge Areas to Identify Risks

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