A study of the methodologies used in risk management standards for dealing with risk attitude in decision making

This study has been devised to both raise awareness on the topic of risk attitude within risk management, but also to advise practicing organisations on the shortfalls of risk management standards, which may have been consulted in the development of their own individual risk management plans. Within this study, the methodologies outlined for dealing with risk attitude, within three risk management standards; the IRM standard, PRINCE 2 and the PMBOK, are examined. Furthermore the different methods, tools and techniques highlighted by different authors in the field are also amalgamated. From this the critical elements for managing risk attitude are identified and used to determine the effectiveness of the risk management standards in managing risk attitude within decision making. Risk attitude can affect ones decision making both in a positive or negative manner and as all stages of the risk management process are executed by individuals there is need for it to be managed effectively. Moreover many authors have argued that there are significant shortfalls with regards the management of human factors in the risk management process. From this study it was discovered that there is no exact method for managing risk attitude, that none of the standards analysed contain a fully effective means for managing it and that the tools described within the risk analysis stage of the risk management processes may need to be revised. There is a gap highlighted within the literature with regards the factors which affect risk attitude and also questions which require clarification on the tools to be utilised within risk analysis. Organisations which have developed their own risk management plans based on these standards should also be aware of their short comings, as by ignoring them this could result in unfavourable outcomes in a project environment. However by not having access to a full range of factors which affect ones risk attitude in decision making, means that it is very difficult to manage it effectively.