We will be undergoing scheduled maintenance on May 20th, 2013 at 02:00 GMT.
PMI: Risk Management Professional (Part 1) Tutorials
Understanding Risk Management / Types of Risk
Subtitles of the Movie (PMI: Risk Management Professional (Part 1) / Understanding Risk Management / Types of Risk)
In this movie we'll take a look at the various types of risk. This includes: Pure Risk versus Business Risk; the difference between Known Risk, Known-Unknown Risk and Unknown-Unknown Risk; as well as Risks Identified by Impact to Project Objectives. There are two basic types of risk: Business Risk and Pure Risk. A Business Risk contains the possibility of gain or loss. This is where a risk may be either a threat or an opportunity. A Pure Risk, on the other hand, contains only the possibility of loss. These are typically insurable risks, and they can also be divided further into the following sub-types of risk: Direct Property Damage, where destruction of property occurs. This may be the result of fire, a flood or windstorm, this can also entail automobile accidents, damage to equipment while in transit, or theft. Next is Indirect Property, or Indirect Consequential Loss. This comes from extra expenses incurred after damage of equipment or as it occurs, and when the business operation is disrupted as a result. A few examples of cost that is incurred includes: replacing equipment; business loss due to the inability of running the business operation; removing debris; having to rent equipment temporarily; and, increased financing. Next we have Legal Liability. This is when someone files a lawsuit for bodily injury, personal injury, or property damage against the company. Cost may be a result, not just of personal injury due to negligence, but also things like damage to the property entity such as design errors, execution errors, or a failed project and also, property damage as a result of negligence. And lastly, we have Personnel-Related, where injury or harm occurs to employees. The costs incurred here include the injury to the employee, the cost of replacing the employee, and the business loss that occurs as a result. Now, let's look at the difference between Known Risk, Known-Unknown, and Unknown-Unknown Risks. Known Risk is where the risk is clear and no uncertainty exists. A popular example used here is death. Known-Unknown Risks, which are risks that you are aware of but don't know exactly how they will affect or influence the project. An example of this is a machine that will, at some point, require maintenance. Unknown-Unknown Risks are risks that we cannot imagine and therefore have no awareness of. An example is a sudden illness that disrupts the workforce and results in a lot of time off by personnel at the same time. In addition to risks associated by level of certainty, they can also be distinguished by type of impact to the project. For example, there are Scope Risks, which are risks that are associated with changes to the project's scope; Quality Risks, which are risks that result in missing the required level of quality; Schedule Risks, which are risks causing missed deadlines, which may be critical when a dependency exists among multiple activities; and, lastly, Cost Risks, which are risks resulting in missed budgets. And that wraps up our review of the various types of risks. In the next movie, we'll cover Risk Categories. The difference between Risk Categories and Risk Type is somewhat blurred. What some companies identify as a Risk Type may be identified as a Risk Category by another. We'll go through them as two separate items, but in the end the way to avoid confusion is by knowing how your current organization labels Risk.
Tutorial Information
| Course: | PMI: Risk Management Professional (Part 1) |
| Author: | Vanina Mangano |
| SKU: | 33982 |
| ISBN: | 1-935320-38-6 |
| Release Date: | 2009-04-08 |
| Duration: | 7 hrs / 109 lessons |
| Work Files: |
Yes |
| Captions: | No |
| Compatibility: |
Vista/XP/2000, OS X, Linux QuickTime 7, Flash 8 |
VTC Sign up & Benefits
- Unlimited Access
- 81,350 Video Tutorials (14,200 free)
- Video Available as Flash or QuickTime
- Over 715 Courses
- $30 for One Month Access
- Multi-User Discounts Available
