Strategic Risk Management
By Rick Bollinger, MSE, PMP
Principal Consultant, Menlo Park Associates LLC
Strategic risk management is a combination of statistical estimating, buffer optimization and extensive leveraging of current and historical project information to make projects more successful and give organizations a competitive edge.
It includes integration of risk management with regular project planning and execution, and maintenance of a risk
database with historical estimates and outcomes as a strategic corporate asset.
The comprehensive system of risk management described avoids a common statistical problem and calculates risk
buffers that protect project objectives with chosen degrees of confidence. Common textbook methods for estimating buffers are based on shaky assumptions, and these are examined.
Risk probabilities and impacts can vary over time. Methods are shown to integrate risk management into project
schedules and budgets so that estimated costs and dates accurately reflect changes during the entire lifetime of the project. The role of risk management in maintaining a portfolio of projects is described.
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