5. The following is from the University of British Columbia Board of Governors’ Policy No. 125 regarding major capital projects:

The University manages risk on major capital projects through a variety of strategies incorporated into its project planning, delivery and procurement processes. Risk management strategies include the avoidance, reduction and transference of risk away from the University, as appropriate. However, some types of risk cannot be fully or economically managed through these means and in those cases, it is prudent and cost efficient to retain and self-insure against such risks.

The document then goes on to describe the establishment of funds for major capital projects to protect against overruns “to manage risk in a prudent and cost-efficient manner, including through the avoidance, reduction or transference of risk away from the University, as appropriate” and to explain how each fund is to be financed. Discuss the general elements of this risk management policy.