Optimal Risk Response plan of project risk management

With the increase in project risk management usage, it is becoming increasingly more important to develop methods on how to allocate risk management budgets among the possible mitigation or transfer plans. Today, risk management plans usually rank the risks and recommend how to handle those with high rankings. Neither their response plan nor response feasibility are considered. Out of five possible response categories to an identified risk, only two require a significant budget investment. This study proposes a linear programming approach to budget allocation and demonstrates the budget constraint method, including sensitivity analysis. The results contribute to defining rules about risk management budgeting.