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03 Types of risks > Embracing opportunities - Pg. 35

types of Risks 35 Management of uncertainties When undertaking projects and implementing change, an organization has to accept a level of uncertainty. Uncertainty or control risks are an inevitable part of undertak- ing a project. A contingency fund to allow for the unexpected will need to be part of a project budget, as well as contingent time built into project schedules. When look- ing to develop appropriate responses to control risks, the organization must make the necessary resources available to identify the controls, implement the controls and respond to the consequences of any control risk materializing. The nature of control risks and the appropriate responses depend on the level of uncertainty and the nature of the risk. Uncertainty represents a deviation from the required or expected outcome. When an organization is undertaking a project, such as a process enhancement, the project has to be delivered on time, within budget and to specification. Also, the enhancement has to deliver the benefits that were required. Deviation from the anticipated benefits of a project represents uncertainties that can only be accepted within a certain range. Control management is the basis of the approach to risk management adopted by internal auditors and accountants. The UK Turnbull Report will be mentioned later in this book, and it concentrates on internal control with little reference to risk assessment. Control management is concerned with reducing the uncertainty associated with significant risks and reducing the variability of outcomes.