Uncertainty is therefore imperfect knowledge and risk is uncertain consequences.
Uncertainty is central to all projects and that uncertainty management is a more descriptive term of the risk management process, and more appropriate for managing the sources of uncertainty that includes risks, threats, and opportunities.
The purpose is therefore not to necessarily eliminate all risk but rather to remove avoidable risk, reduce uncertainty and retain a desired level of intrinsic risk.
Key actions to reduce intrinsic risk include: The conventional stages of risk management are typically represented by a six phase approach namely: risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning, and risk monitoring and control.
These risk responses are more appropriate to threats than opportunities.
Four opportunity response strategies are: exploit by increasing the probability of it happening on an aggressive basis, share the opportunity with other stakeholders to maximise the opportunity, enhance the opportunity by seeking to increase the probability and impact to reap the benefit and lastly, ignore, or by means of a contingency plan or reactive approach should the opportunity materialise.
These in turn influence the risk management process to be implemented.
This phase requires the explicit statement of inclusion of both opportunities and threats with detailed documentation of opportunity management processes.
There are a number of techniques for risk identification including, but not limited to, brainstorming, checklists, prompt lists, questionnaires, and Delphi groups as well as various diagramming approaches.
The techniques may be used to identify both opportunities and threats.