The total project cost is often estimated during the

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The total project cost is often estimated during the initiating phase of the project or when the project charter or a proposal is prepared. Chapter Eight Waiting for unfavorable events to occur and then reacting to them can result in panic and costly responses . A common approach to identifying the sources of risk is brainstorming . Risks on the critical path should be given higher priority because if the risk occurs, it would have a greater impact on the schedule than if it was associated with activities on a path that has a large positive value of total slack. In most projects, every activity can take longer than estimated or cost more than estimated, so common sense and reasonableness must prevail when identifying risks. The degree of impact is a rating of low, medium, or high based on the expected level of change in completing the project's objective if the risk were to occur during the project. Establishing risk categories may help to identify and evaluate risks. Some categories to help identify risks include external factors, sponsor and customer, cost and human resources, technical and schedule .
Risk identification includes determining which risks may adversely affect the project objective and what the impact of each risk might be if it occurs. For each risk that is identified the potential impacts must be estimated . Risk response planning involves developing an action plan to reduce the likelihood of occurrence or potential impact of each risk, establishing a trigger point for when to implement the actions to address each risk, and assigning responsibility to specific individuals for implementing each response plan. A tool for assessing and managing risks is a risk assessment matrix , also referred to as a risk register , which includes potential risks, their potential impact, likelihood of occurrence, and response plan. Monitoring risk includes implementing risk response plans, tracking identified risks, identifying and analyzing new risks, and evaluating the risk response process . Risks may change as the project progresses and should be reflected in the risk response plan . A risk event is an uncertain event that, if it occurs, can jeopardize accomplishing the project objective. Risk Management involves identification, assessment, monitoring, and response to project risks to minimize the likelihood of occurrence and/or potential impact of adverse events on the accomplishment of the project objective. A trigger point to take action for a specific risk would include the following except to authorize a budget increase if the budget is over 1% of the project baseline. A risk response plan should include a trigger point or warning flag for when to implement the action plan for each risk. Risks are prioritized based on the likelihood of occurrence and degree of impact .

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