Risk Management has six steps:
- Planning risk management - decides how to approach and plan the risk management activities for the project.
- Identifying the Risks - determines with risk are likely to affect the project and documenting the characteristics of each.
- Performing qualitative risk analysis - prioritizes risks based on their probability and impact of occurrence.
- Performance quantitative risk analysis - numerically estimates the effects of risk on project objectives.
- Planning risk responses - takes stapes to enhance the opportunities and reduce the threat to meeting project objectives.
In each step, uncertainty is present. Reducible (Epistemic) and Irreducible (Aleatory) uncertainties. In the presence of these uncertainties, estimates must be made of all aspects of the risk management process.
When we hear that decisions can be made and projects can be managed in the presence of uncertainty without estimating, it's simply not true. Anyone suggesting that has failed to understand
There is no principle of Managerial Finance, Probabilistic Decision-Making, or Microeconomics of software development in the presence of reducible and irreducible uncertainty, by which a credible decision can be made, while spending other people's money, without estimating the outcomes of that decision and its impact on the probability of success of the project.
