What do you mean by contingency reserve?

What do you mean by contingency reserve?

A contingency reserve is retained earnings that have been set aside to guard against possible future losses. By setting up a contingency reserve, a board of directors is sending a signal to shareholders that the reserved funds are not available for distribution to them as dividends.

What is a known unknown risk?

Known unknowns are the risks that the organization is aware of but is unaware of the size and effect of the risk. An organization may know that there is a risk that rain may affect business operations, but the lack of knowledge about how much rain there will be makes it hard to make concrete plans.

Do we distribute contingency reserve?

Yes, Contingency Reserves are those reserves which is created for contigent liabilities I.e. those liabilities which may occur or may not occur. Since old partners maintained this reserves so it will be distributed in old partners in old ratio. All reserves are shared between all the partners.

Is contingency reserve part of cost baseline?

It is not part of Cost Baseline or Schedule Baseline. Use of contingency reserve doesn’t change the cost baseline.

What is the difference between a known and an unknown risk?

When considering risk, known knowns are those matters which you are fully aware of and can plan for in advance. Known unknowns are those risks which you ‘know that you don’t know’ – risks that you know exist, but can’t accurately quantify their potential impact.

How do you manage an unknown risk?

The paper lists five emerging strategies for coping with unknown risks:

1. Use “reverse stress testing” to identify vulnerabilities.
2. Manage crises as if they occur every day.
3. Enable a company-wide response to emerging threats.
4. Integrate risk management and strategic planning.

How do you plan an unknown?

Dealing with uncertainty – how to plan for the unknown

1. Keep up to date with developments without losing perspective. In today’s digital world there is an onslaught of easily accessible information.
2. Stick to the facts.
3. Prepare for multiple outcomes.
4. Be flexible and open to opportunity.
5. Know your numbers.
6. Build on your relationships.

How can companies manage unknown and unknowable risks?

To manage unknowable risks, companies should ensure business processes remain flexible, ensuring variable costs and diversifying across products and markets whenever possible.

What is emergent risk?

Emergent risk These are risks which we are unable to see because they are outside our experience or mind set, so we don’t know that we should be looking for them. Another popular term for emergent risks is “unknown unknowns,” which are things that we do not know but where we are unaware of our ignorance.

What are non event risks?

Non event based risks are basically subtle risks which can be either due to set of conditions which are certain to happen (but the extent of its impact is not known) or ambiguity or disruption that may happen which is not known at all.