Effective risk management: a goal based approach

The United States Department of Defense (DoD) and National Aeronautics and Space Administration (NASA) have implemented ambitious risk management prog rams on top research and development projects. Typically, risk is expressed strictly in terms of cost, schedule or technical performance. This approac h can result in the obscuration of other important project objectives. Furt her, methods for systematically and effectively prioritizing risk reduction efforts are not generally employed. This paper presents an analytical fram ework for measuring risk that expresses risk in terms of top-level project objectives. It also proposes a method for the prioritization of risk reduct ion activities based on expected risk reduction, likelihood of success. and cost of implementation.