CSIT214 Lecture Notes - Lecture 8: Risk Appetite, Risk Aversion
18 Dec 2019
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Document Summary
Risk is any uncertainty related to a project that leads to some impact which may be positive or negative. Positive risks are usually referred to as opportunities. Risk attitude (risk appetite / risk tolerance) --- what are each, how do they effect the project (selection and management), give example. Risk appetite is the degree of uncertainty an entity is willing to take on in anticipation of some benefit or reward. Risk tolerance is the maximum acceptable deviation an entity is willing to accept on a project. A project might be selected based on how well it meets an entity"s risk attitudes (i. e. within the tolerances and in balance with reward expected by taking on the risk) Risk avoidance: eliminating the possibility of certain risks by eliminating events associated with them / causes of the risk (eg choosing not to use unfamiliar software/only using familiar software in the development of a system)
