**6. References**

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© 2012 Gonen, licensee InTech. This is an open access chapter distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use,

distribution, and reproduction in any medium, provided the original work is properly cited.

© 2012 Gonen, licensee InTech. This is a paper distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Usually project risk management plans deal with identifying, assessing and planning adequate responses to risks. The main problem is that there are many types of response plans, and we must be able to select the optimal one. The usual approach is to first handle the most "dangerous" risk (the risk with the maximum expected damage). However, handling this risk may also be very expensive and beyond the limitations of the allocated risk budget. The dilemma is how to select the right risks to be handled within a limited

Risk management methodology was first described in detail by Wideman in [1]. The methodology was then improved by the PMI [2], adding details based on users' experience.

1. Planning Risk Assessment, which includes selecting an assessment team, setting up rules, and determining the supporting risk management tools. The risk assessment team

2. Risk Identification is a process of defining future events that should be considered as risk events. The list is usually generated by a brain-storming session conducted by the projects' experts. The list is then reduced to the most important risks. This step is

3. Risk Assessment is the quantification of identified risks, conducted in order to define priorities among the possible risk events. It usually includes the probability of the event and the severity of the damage. Later, the ranking of risks is based on these two parameters. One possible method is the Borda [3] methodology for ranking alternatives.

should include representatives from all areas related to the project.

sometimes subjective, but this issue is not relevant to this paper.

**Selecting a Response Plan** 

**Under Budget Constraints** 

Additional information is available at the end of the chapter

**2. Risk management methodology** 

Project Risk management involves the following steps:

A. Gonen

http://dx.doi.org/10.5772/50202

**1. Introduction** 

budget.

[25] Zhang, P. G. (2001) Exotic Options. World Scientific, Singapore. 2*nd* edition.
