Project Risk Management Incorporating Knight, Ellsberg & Kahneman

Abstract

This work investigates the Practice Standard for Project Risk Management (PSPRM) in light of the fundamental organizational risk research. As a result of this investigation, the work finds that the PSPRM is lacking some key concepts from the extant organizational risk literature and that other fundamental risk concepts are not applied in a manner consistent with the literature. Building on these findings, the work illustrates how project risk management and project risk research might be effected by these deficiencies and recommends some simple measures that could be implemented to usefully augment the PSPRM and project risk research.

Development and Introduction of the Risk-Sentience Auxiliary Framework (RSAF) as a Robust Enabler to the ISO 31000 and ISO 31010 for High-Risk Environments

“…Combining the works of Knight and Ellsberg, John Prpić summarized the key 99 differences between risk and uncertainty, and defined risk as a situation where the probability and 100 impact estimates of an event are objectively known, and the confidence in the quality of the 101 information used to construct these estimates is very high. He further defined uncertainty as a 102 situation where the probability and impact estimates of an event are subjectively determined, and 103 the confidence in the quality of information used to construct these estimates varies from low to high 104 [2]. But as the ISO definition points out, the crucial determinant in identifying uncertainty is its 105 potential to eventually lead to an effect on objectives, thereby causing a risk.…”

“…The ISO 31000: 2009 which sets 51 out the global best-practice standard in organizational risk management appears to have covered 52 several aspects of efficient risk management in theory. In practice however, it has been open to 53 debate whether its approach relating to the concept of uncertainty is appropriate [2] (p.p 5-8), and 54 whether the potential for achieving support and feeling of ownership of the risk-management 55 process within the non-management employee category is realistic within this framework.…”

Communication Barriers in the Decision-making Process: System Language and System Thinking

“…Therefore, the observations are expanded by involving a second group, in this case consisting of 27 experienced project professionals because they also have a role in the decision-making process [22]. They are active in governmental agencies and have an average of 15,1 years work experience, of which 63% is IT-related.…”

Development and Introduction of the Risk-Sentience Auxiliary Framework (RSAF) as a Robust Enabler to the ISO 31000 and ISO 31010 for High-Risk Environments

“…The ISO 31000: 2009 which sets 49 out the global best-practice standard in organizational risk management appears to have covered 50 several aspects of efficient risk management in theory. In practice however, it has been open to 51 debate whether its approach relating to the concept of uncertainty is appropriate [2] (p.p 5-8), and 52 whether the potential for achieving buy-in and feeling of ownership of the risk-management process 53 within the non-management employee category is realistic within this framework. According to the 54 ISO 31000, risk is defined as the effect of uncertainty on objectives [6].…”

“…Combining the works of Knight and Ellsberg, John Prpic summarized the key 95 differences between risk and uncertainty and defined risk as a situation where the probability and 96 impact estimates of an event are objectively known, and the confidence in the quality of the 97 information used to construct these estimates is very high. He further defined uncertainty as a 98 situation where the probability and impact estimates of an event are subjectively determined, and 99 the confidence in the quality of information used to construct these estimates varies from low to high 100 [2]. But as the ISO definition points out, the crucial determinant in identifying uncertainty is its 101 potential to eventually lead to an effect on objectives, thereby causing a risk.…”