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Definition:

A risk is a possibility of a negative outcome due to an activity or choice. Almost any activity imaginable has one or more risks associated with its creation and/or operation. Risk is often presented as a probability. For example, a "50/50 chance" that an event will occur. Risk can be increased or decreased, depending on additional actions and decisions that can be undertaken.

During the project stage of an outsourcing program, a risk-management plan would be created. The project team would identify all risks, and then determine which could be safely ignored and which would need to mitigated or eliminated. Almost any risk can be mitigated. As part of the risk-management plan it would be determined the trade-offs or costs needed to resolve outsourcing risks and if the program would still be worth doing, after paying for all necessary risk remediation.

Even when a good risk plan is created at the start of an outsourcing project, it is rarely possible to know every possible risk and to correctly estimate the consequences of each risk. Most risk are at least partially dependent on outside variables, such as: the economy, the weather, or changing politics. The further way you outsource (to another city, state or country) the more likely that you will encounter unfamiliar or unknown risks, and therefore the more important it is to have a good risk plan.

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