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Types of Risk

For the PMP exam, know that risks can be categorized under two main types:

Business  Risk of a gain or loss
Pure (Insurable) Risk  Only a risk of loss (e.g., fire, flood, theft…)

When identifying and categorizing your project risks, don’t forget that risks can also be positive.  Many mistakenly only list the negative.  Regardless, the purpose of risk management is to lower it.  Again, business risk can be beneficial or detrimental.  Pure risk is always detrimental. 

About Derek Huether

I'm Vice President of Enterprise Engagements at LeadingAgile. I'm super focused on results. But I also take the hand waving out of organizational transformations. I come from a traditional PM background but I don't give points for stuff done behind the scenes. The only thing that counts is what you get done and delivered. Author of Zombie Project Management (available on Amazon)

2 Responses to “Types of Risk”

  1. centrino
    November 2, 2010 at 9:36 am

    Quote : “Regardless, the purpose of risk management is to lower it”
    Comment : well the statement is 50% true; as a Risk can be positive (read have a positive impact on the project), the purpose of Risk Management is also to increase the impact of Positive Risks (i.e Opportunities)

    Greetings from Brussels

    • Anonymous
      November 2, 2010 at 11:38 am

      That’s an interesting take. I don’t think increasing impacts of opportunities falls under risk management, though I certainly see it providing potential value. That’s more scope management. For textbook PMP exam, you don’t want positive or negative risks.

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