4.3.3 Risk Management Is
Effective risk management is based on the premise that PMs must identify potential problems, referred to as risk events, long before they can occur and develop strategies that increase the probability/likelihood of a favorable outcome to these problems. Application of this philosophy occurs primarily by using analytical techniques that give forward-looking assessments.
Typically, the early identification of potential problems is concerned with two types of events. The first are relevant to the current or imminent acquisition phase of a program (intermediate-term), such as satisfying a technical exit criteria in time for the next milestone review. The second are concerned with the future phase(s) of a program (long-term) such as potential risk events related to transitioning a system from development to production.
By analyzing critical events, certain risks can be
determined. To do this, one should consider the range of potential outcomes
and the factors that determine those outcomes. Through risk handling, a PM
then develops approaches that minimize risk factors. Paragraph 5.6 of this Guide describes some handling approaches.
Choosing the proper risk-handling options requires
that a balance be struck between the resources required to implement those
options and their payoffs (both intermediate and long-term) and the resources