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Financial Risk Assessment

Risk is a concept used to identify the variables in a project whose variation can significantly affect the project outcome. Financial risk factors include things that affect revenue, cost, or the timing of cash flows that affects the need for capital. Revenue varies with price and volume. Variations in either are important. Costs can also be related to price of materials or other inputs and volume. Cost can be affected by design.

In the course of a project, it is always important to recognize that volumes, prices, input costs, and design progress are variables whose possible variation needs to be thought of and responded to. For your project, briefly identify briefly (1-2 pages) the key financial variables and what you believe are reasonable assumptions about how they may vary. Identify what actions can be taken to mitigate the affects of the expected variation and who is responsible for triggering appropriate responses to observed variations.