The effectiveness of risk management: measuring what didn’t happen

Abstract

Two of the most common reasons for not implementing a risk management program are cost and benefit. This paper focuses on whether the benefits of intervention can be shown to justify the costs. A confounding factor is that the acts of intervention during a risk management program may alter the outcome in ways we cannot separate and therefore cannot cost out. A second confounding factor is response bias – the tendency of individuals consistently to underestimate or overestimate risk, resulting in interventions that may be ineffective or excessively wasteful. The authors demonstrate that signal detection theory (SDT) can be used to analyze data collected during a risk management program to disambiguate the confounding effects of intervention and response bias. SDT can produce an unbiased estimate of percent correct for a risk management program. Furthermore, this unbiased estimator allows comparison of results from one program to another.

Assessment and Problems of Projects Implemented by Companies and Co-Financed by the European Union Funds in Latvia

“…The next project risk management phase can be called the phase of the action plan implementation during which not only the previously worked-out events for risk decreasing are carried out, but also, if necessary, the action plan for risk decrease is supplemented. Research literature recommends during the project implementation to envisage also extraordinary action plans if the action plan to avoid project risks turns out to be ineffective and some of the risks has set in during the project implementation and is a threat to successful project implementation (McGrew, Bilotta, 2000). Effective project risk management is a continuous process during the whole project implementation time (Barton, Shenkir, Walker, 2002).…”

A Risk Management Approach for the Project Management Process

“…Many authors have noted that little information exists on systems that can measure the effectiveness of project management, or risk management for that matter. The search into this topic resulted in a representative list of articles [16][17][18][19][20][21][22][23]. The reason for this can be twofold.…”

Insight into Risk Management in Five Software Organizations

“…To succeed with a software project is not always obvious [4,6]. According to the Standish Group International, only 24% of projects deliver within the planned time and budget [2].…”