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Accept
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A risk response that means the organization takes the chance that the risk will occur, with full impact on objectives if it does.
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Avoid
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A risk response that seeks to eliminate a threat by making the situation certain.
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Backlog
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A list of new features for a product. The list may be made up of user stories which are structured in a way that describes who wants the feature and why. It is also a generic term that can be defined in terms of releases, sprints, and products.
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Benefit
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The measurable improvement resulting from an outcome perceived as an advantage by the investing organization(s) and which contributes towards one or more organizational objectives.
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Competence
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The ability to do something successfully.
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Contingency
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A provision for a potential future situation.
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Contingent Plan
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A reactive risk response designed to be used if existing controls and any other proactive risk responses are unsuccessful.
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Continual Improvement
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A delivery mode used for improvement work that enables an organization to identify waste or redundancy in a product, service, process, or system. Work to eliminate this creates releases of additional value.
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Corporate Governance
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The means by which an organization is directed and controlled. At the level of the legal entity, corporate governance is focused on maintaining a sound system of internal control by which the directors and officers of the organization ensure that effective management systems are in place to protect assets, earning capacity, and the reputation of the organization.
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Correlation
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The statistical dependence between two or more variables; for example, activities in a schedule that rely on the same resource for their completion.
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Current/Net Assessment
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The largest realistic likelihood of occurrence or size of impact of a risk, assuming that all existing controls are implemented and effective. Also known as residual risk.
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Decision Bias
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The inherent tendency for people to adopt mental short cuts (heuristics) or faulty thinking processes (cognitive biases) to process situations and make decisions.
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Decision Gate
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An approval point where members of a governing body are required to decide how to proceed. Alternatively referred to as stage gates or stage boundaries.
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Delegated Limits Of Authority
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Clarification of the responsibilities of decision-makers relating to defined objectives, including commitment of expenditure and legal undertakings.
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Deterministic
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A situation or plan where the outputs are predicted assuming a fixed order and fixed parameters.
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Downside Risk
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A negative threat to objectives that would destroy planned value if it occurred.
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Enhance
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A risk response for an opportunity that seeks to increase the likelihood and/or impact.
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Enterprise Agility
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A condition of an organization that is able to be flexible and responsive to drivers in its environment. Enterprise agility (also called ‘corporate agility’ or ‘organizational agility’) enables the organization to remain resilient.
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Enterprise Risk Management (ERM)
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The culture, capabilities, and practices that are effected by an organization’s management and applied in strategy-setting and across the entire enterprise or legal entity. ERM identifies and manages risk to be within an organization’s risk appetite, and provides reasonable assurance regarding the achievement of organizational objectives.
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Expected Value
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The product of the estimated most likely impact of a risk and the estimated likelihood expressed as a percentage. Where the impact is financial, it is known as the expected monetary value.
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Exploit
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A risk response for an opportunity that seeks to make the situation certain.
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Financial Contingency
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The financial allowance that decision-makers provide to deal with identified and unidentified risks.
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Functional Orientation
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An operating model primarily organized as a hierarchy, with specialists deployed in each function; for example, marketing, sales, manufacturing, logistics, procurement, accounts, compliance, human resources, customer services, etc.
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Futures Thinking
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A mindset and process focused on divergence, with a focus on possibilities. The opposite is analytical thinking, which seeks to create convergence and provide definite answers.
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Hybrid Project Delivery Mode
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A project delivery mode that combines a linear/sequential delivery mode for some phases or activities with an iterative/agile delivery mode for others.
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Impact
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The estimated effect on objectives should a risk occur.
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Inherent/Gross Assessment
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The largest realistic likelihood of occurrence or size of impact of the risk, assuming either that no controls exist, or that all controls or other actions fail.
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Issue
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An unplanned event that has occurred and requires management action. An issue may be a problem, a query, a change request, or a risk that has occurred.
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Iterative/Agile Project Delivery Mode
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A project delivery mode that repeats aspects of the design or delivery with the objective of managing any uncertainty of scope by allowing outputs to evolve as learning and discovery take place.
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Leading Indicator
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An observable and/or measurable instance that is evidence of the likelihood and/or size of impact of a risk beginning to change. It is the opposite of a lagging indicator which is only observable after the change. Alternatively called an early warning indicator.
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Likelihood
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The estimated chance that a risk will occur. Likelihood is often estimated by considering probability or frequency.
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Linear/Sequential Project Delivery Mode
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A project delivery mode that aims to complete the delivery of outputs within a single pass through a set of distinct phases, completed in sequence.
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Multimodal Delivery
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The selection of methods of delivering the work that are appropriate to the task, the team, the individuals (including customers, stakeholders, leaders, and workers), and the context.
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Neutral Facilitator
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A person who is independent of the risk analysis and management work being performed, and who has the skills to help the group come to an unbiased set of decisions about risks and their priority.
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Operation
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The routine running and management of an activity, product, or service.
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Portfolio
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The totality of an organization’s investment (or segment thereof) in the changes required to achieve its strategic objective.
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Principal Risk
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A risk that, if it occurred, would have a material effect on the current performance, future prospects, and/or reputation of an organization.
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Principle
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A guiding obligation that is continually required to create and protect value from risk management.
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Proactive Risk Response
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An action that is taken in advance of a risk occurring to attempt to influence the likelihood of its occurrence and/or the size of its impact.
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Probabilistic
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A situation or plan where the outputs are predicted, taking into account variability and randomness. Alternatively called stochastic.
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Process
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A structured set of activities that define the sequence of actions and their inputs and outputs to achieve a specific objective.
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Process Cycle
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A continuous sequence of processes, starting with the ‘define context and objectives’ process, and repeated as necessary to ensure that the organization has an up-to-date view of the risks it faces in order to support effective decision-making.
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Product
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An output of a design and development process that is delivered to create value for the organization and/or end-user. Products can be physical assets or services.
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Product Orientation
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An operating model primarily organized around self-managed teams focused on the development, launch, support, renewal, and replacement or retirement of products and services.
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Programme
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A temporary structure designed to lead multiple interrelated projects and other work in order to progressively achieve outcomes of benefit for one or more organizations.
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Project
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A temporary organization that is created for the purpose of delivering one or more business products according to an agreed business case.
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Proxy Measure
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A measurable variable that is an indirect but strongly correlated measure of the desired outcome. An example would be measuring the number of customer complaints as a proxy measure for determining customer satisfaction.
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Qualitative
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Related to the quality of a variable rather than the quantity.
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Quantitative
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Related to the quantity of a variable rather than the quality.
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Reactive Risk Response
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An action that is planned to be implemented if a risk occurs to control the size of impact.
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Reduce
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A risk response to a threat that seeks to reduce likelihood and/or impact.
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Resilience
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The ability of a person or an organization to deal with unplanned events and respond strongly, ideally addressing not only anything that has been lost, but turning the adversity into an opportunity for greater value to be created in future.
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Risk
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An uncertain event or set of events that, should it occur, will have an effect on the achievement of objectives. Risk is a neutral concept; risks can either be threats (downside risks) or opportunities (upside risks).
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Risk Action Owner
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The person who is the nominated owner of agreed actions to respond to a risk. Also known as the risk actionee.
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Risk Appetite
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The amount and type of risk that the organization is willing to take in pursuit of its objectives.
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Risk Capacity
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The amount and type of risk that the organization is able to take in pursuit of its objectives.
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Risk Culture
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The patterns of day-to-day, risk-based, decision-making behaviours shared by a group of people with a common purpose.
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Risk Exposure
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The degree to which a particular objective is ‘at risk’. Risk exposure is a neutral concept; exposure can be positive or negative.
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Risk Management
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The coordinated direction and control of an organization undertaken to protect and create value in the face of risk.
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Risk Owner
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The person who is assigned to take responsibility for responding to a risk to the satisfaction of the relevant governance board.
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Risk Perception
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The way in which a stakeholder views a risk, based on a set of values or concerns.
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Risk Proximity
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How near in time a risk might occur.
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Risk Tolerance
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A measurable threshold to represent the tolerable range of outcomes for each objective ‘at risk’, using the same units as for measuring performance for that objective.
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Risk Velocity
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How quickly a risk would have an impact on objectives should it occur.
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Share
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A risk response for an opportunity that seeks to allocate ownership and/or responsibility to a third party best able to maximize its likelihood and/or impact.
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Stakeholder
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Any individual, group, or organization that can affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome.
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Stochastic
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A situation where uncertainty and randomness are incorporated into analysis, modelling, forecasting, or planning. Also known as probabilistic.
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Threat
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An uncertain event that would, if it occurred, have a negative impact on objectives.
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Three-Lines Model
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A governance framework that helps organizations clarify responsibilities for managing risk and exercising control.
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The three lines comprise:
- First Line – operational management responsible for owning and managing risks.
- Second Line – functions that provide guidance, oversight, monitoring, and compliance support.
- Third Line – independent assurance, typically internal audit.
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Transfer
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A risk response for a threat that seeks to allocate ownership and/or responsibility to a third party that is best placed to manage it.
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Triple Bottom Line
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A framework used to assess performance based on three dimensions rather than solely financial outcomes.
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These dimensions are:
- People – social value and impact.
- Planet – environmental sustainability.
- Profit – economic value and financial performance.
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Upside Risk
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A positive opportunity that, should it occur, would have a beneficial effect on the achievement of objectives.
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Value
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The perceived importance, worth, usefulness, or benefit of something to stakeholders.
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Value Creation
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The process of generating benefits, outcomes, capabilities, or improvements that contribute positively to the achievement of organizational objectives.
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Weak Signal
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An early indication of a potentially significant future event, trend, or risk that is currently uncertain, incomplete, or difficult to detect.
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Workaround
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An action or technique that reduces or removes the impact of a risk, issue, or problem without fully eliminating its underlying cause.
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