In Practice Standard for Project Risk Management the authors illustrate the structure of a quantitative risk analysis. The structure contains Risk Prioritization, Examine Interrelationships Between Risks, Collect High Quality Risk Data, Project Model, Perform Quantitative Risk Analysis, and Results. The second step in this process, examining interrelationships, can have significant impact on the risk analysis and mitigation measures employed by the project management team. This step involves mapping the identified risks in relation to other risks as well as underlying issues identified during the process. Eliyahu Goldratt spends a great deal discussing the transfer of risk across a series of dependencies with any particular development model. He discussed this phenomenon with regards to project management in his book, The Critical Chain and again in his book, The Goal with regards to production management. The interrelationships between risks are sometimes easy to spot as risks compound over a particular series of production steps. Generally later items with severe delay are those where risk was transferred across the dependencies.
The management tools Goldratt communicates in these books include his popular Theory of Constraints and Critical Chain Project Management. Both of these offer great insights that improve project management overall and contain four risk management strategies common in project management literature. These strategies are Avoid, Mitigate, Transfer and Accept. In critical chain project management the intent is to shift project risk from each individual task to an overall risk for the entire project. This forces managers within the project to look for ways to mitigate and transfer risks.
According to Adrienne Watt mitigating risk “means taking some sort of action that will cause it to do as little damage to your project as possible.” The goal is to mitigate the effects of the risk. One way critical chain project management reduces the effects of the risk is to remove risk calculations from the local managers. As mentioned above one of the major tenets of that methodology is to shift the risk from the different efforts within the project to the project as a whole. This tenet is a risk mitigation strategy. One of the other strategies explained in that book involves transferring risk. One way the book articulates this is with a project that has some of its labor contracted to others. In the book the project manager shifts the risk of late deliverables from the project itself back to the contractor under terms that are amicable to both.