Risk tolerance line

Success Problem

What is the role of the risk tolerance line in project management ?

Impact

Risk tolerance line is the highest still neglectable negative deviation of the project output quality or schedule variance or cost variance for the project or its part.

Recommendation

If the deviation is under the limit, the project manager must not apply the risk mitigation actions. If the deviation exceeds the limit, the project manager must apply the risk mitigation actions. Risk tolerance line is suggested by the project manager in order that the risk is not unacceptable and is agreed by the project steering committee. Risk tolerance defines the level of risk acceptance or risk avoidance.

Category

• Risk & Opportunities
• Reliability
• Decision Competences