Corporate Risk Management, 2nd Edition

4

Risk Management Tools and Techniques

4.1 INTRODUCTION

The management of risk is currently one of the main areas of interest for researchers and practitioners working in a wide range of projects because of the benefits of the process. Risk management is one of the key project management processes. Numerous techniques are available to support the various levels of the risk management process.

Risk management is a tool which is increasingly used in organisations and by public bodies to increase safety and reliability and to minimise losses. It involves the identification, evaluation and control of risks. Implicit in the process is the need for sound decision making on the nature of the potential socio-technical systems and their predicted reliability. The need for safety measures and guidance as to where they should be displayed are, in theory, the natural products of combined probabilistic risk assessment/human reliability analysis (PRA/HRA) studies. In an ideal world, good assessment should always drive effective error reduction.

This chapter describes the tools and techniques used in the assessment of risk, both qualitative and quantitative, and country risks which are often considered a major factor in risk assessment. The tools and techniques described can be used at corporate, strategic business and project levels.

4.2 DEFINITIONS

French and Saward (1983) describe a tool as any device or instrument, either manual or mechanical, which is used to perform work.

Distinguishing ...