Acceptable risk

Success Problem

I was nominated as a project manager. How can I asses how much risk is acceptable for my project?

Impact

Acceptable risk is the risk with acceptable negative event impacts upon project objectives or upon the project success.

Recommendation

The risk acceptance is a matter of subjective decision. Negative event impacts are acceptable if it is not ne-cessary to prepare the risk mitigation measures. The opposite is the unacceptable risk. In this case it is ne-cessary to prepare the risk mitigation measures. The acceptance of the event impacts can be assessed in quantitative or qualitative way. Two possible approaches to the determination of the risk acceptance limits are as follows: Little 0 – 30 % (centre: 15%) Neglected 1 – 20 % (centre: 10%) Middle 31 – 70 % (centre: 50%) Little 21 – 40 % (centre: 30%) Great 71 – 100 % (centre: 85%) Middle 41 – 60 % (centre: 50%) Important 61 – 80 % (centre: 70%) Decisive 81 – 99 % (centre: 90%) The project manager has to draw the attention of the project steering committee to the suggestion to stop the project, if the impact is assessed to be „great“ or „decisive“, because in other way it is hazard.

Category

• Risk & Opportunities