Risk Themes
Important themes to study around risks are,
Risk Tolerance
Risk Tolerance is the degree of risk you are willing to accept
Risk Appetite
Risk appetite is the level of risk that your organization as a whole is prepared to accept while pursuing its objectives
So while risk tolerance is the level of risk that you as the Project Manager of the organization can accept per individual risk, risk appetite is the total risk that the organization can bear in a given project, usually expressed as an aggregate. Another way to differentiate the two is that risk tolerance can have a very specific value while risk appetite can be a broader range
Risk Threshold
Risk Threshold is the degree of risk beyond which you would initiate execution of the risk response
Risk Attitudes
As far as the attitudes towards risk goes, essentially there are three of them,
Risk Seeker
Someone who seeks risks. If you are wondering why would anyone do that, possibly because of the thrill but most likely because of the possibilities of finding positive risks or opportunities
Risk Neutral
Someone who is not actively seeking or avoiding risks. Most of us might fall in this category because if there is a risk we will act on it and if it turns out to be an opportunity what could be better?
Risk Averse
Someone who does not want to take any risks whatsoever. A risk averse person’s response to risk could most likely be avoiding it
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