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Risk management
Risk management

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5 Summary of Session 4

Session 4 has focused on risk assessment. You have discovered that while there are many factors that can be used to assess risk, probability and impact are of greatest importance. To illustrate probability and impact you have covered the use of the PID diagram.

In discussing earthquakes and road risks you should now recognise that it is essential to understand what the risk’s consequences of interest to you are and how these come about (the root causes) in order to correctly assess the risk. You should also now understand that everyone in an organisation must assess in a common way for there to be effective risk assessment across the organisation.

You were introduced to the use of mathematical models in risk management, a subject that is too large to be covered sufficiently here. If you found this an area of particular interest then you could research opportunities to find out more. Finally the session closed by considering some of the human factors involved in risk assessment.

The main learning points that have been covered in this session are:

  • the process of arriving at an ‘assessment value’ for the risk – scores and Probability and Impact Diagrams (PIDs) (gross, current, residual)
  • how to assess risk events (basic probability and impact assessment)
  • ‘basis of estimate’ – including the Programme Evaluation and Review Technique (PERT)
  • risk modelling – including Monte Carlo analysis and Schedule Risk Analysis (SRA).

You are now halfway through the course. The Open University would really appreciate your feedback and suggestions for future improvement in our optional end-of-course survey [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] , which you will also have an opportunity to complete at the end of Week 8. Participation will be completely confidential and we will not pass on your details to others.

Now move on to Session 5 which looks at risk treatment.