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    Risk Management

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    Major Duke
    Risk is inherent in project management and can impact cost, schedule, and quality if a risk event occurs. The risk management process involves identifying risks, assessing their likelihood and impact, developing responses, and monitoring risks. Benefits of risk management include a more proactive approach, reduced surprises, and improved chances of meeting objectives. The risk management process involves identifying risks, assessing them, developing responses like mitigation, transfer, avoidance, or retention, controlling risks, and repeating the identification process.

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    Risk Management

    Uploaded by

    Major Duke
    127 views12 pages
    Risk is inherent in project management and can impact cost, schedule, and quality if a risk event occurs. The risk management process involves identifying risks, assessing their likelihood and impact, developing responses, and monitoring risks. Benefits of risk management include a more proactive approach, reduced surprises, and improved chances of meeting objectives. The risk management process involves identifying risks, assessing them, developing responses like mitigation, transfer, avoidance, or retention, controlling risks, and repeating the identification process.

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    Risk is inherent in project management and can impact cost, schedule, and quality if a risk event occurs. The risk management process involves identifying risks, assessing their likelihood and impact, developing responses, and monitoring risks. Benefits of risk management include a more proactive approach, reduced surprises, and improved chances of meeting objectives. The risk management process involves identifying risks, assessing them, developing responses like mitigation, transfer, avoidance, or retention, controlling risks, and repeating the identification process.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    127 views12 pages

    Risk Management

    Uploaded by

    Major Duke
    Risk is inherent in project management and can impact cost, schedule, and quality if a risk event occurs. The risk management process involves identifying risks, assessing their likelihood and impact, developing responses, and monitoring risks. Benefits of risk management include a more proactive approach, reduced surprises, and improved chances of meeting objectives. The risk management process involves identifying risks, assessing them, developing responses like mitigation, transfer, avoidance, or retention, controlling risks, and repeating the identification process.

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    Risk

    Risk is inherent in project management Risk might become reality or may not happen Risk has a cause and if it becomes a reality then there will be consequences It can impact cost, schedule and quality of project

    Risk Management Process


    Risk
    Uncertain or chance events that planning can not overcome or control.

    Risk Management
    A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a projects success.
    What can go wrong (risk event). How to minimize the risk events impact (consequences). What can be done before an event occurs (anticipation). What to do when an event occurs (contingency plans).

    The Risk Event Graph

    Risk Managements Benefits


    A proactive rather than reactive approach.

    Reduces surprises and negative consequences.


    Prepares the project manager to take advantage of appropriate risks.

    Provides better control over the future.


    Improves chances of reaching project performance objectives within budget and on time.

    The Risk Management Process

    Managing Risk
    Step 1: Risk Identification
    Generate a list of possible risks through brainstorming, problem identification and risk profiling.
    Macro risks first, then specific events

    Step 2: Risk assessment


    Scenario analysis Risk assessment matrix Failure Mode and Effects Analysis (FMEA) Probability analysis
    Decision trees, NPV, and PERT

    Semiquantitative scenario analysis

    Managing Risk (contd)


    Step 3: Risk Response Development
    Mitigating Risk
    Reducing the likelihood an adverse event will occur. Reducing impact of adverse event.

    Transferring Risk
    Paying a premium to pass the risk to another party.

    Avoiding Risk
    Changing the project plan to eliminate the risk or condition.

    Sharing Risk
    Allocating risk to different parties

    Retaining Risk
    Making a conscious decision to accept the risk.

    Contingency Planning
    Contingency Plan
    An alternative plan that will be used if a possible foreseen risk event actually occurs. A plan of actions that will reduce or mitigate the negative impact (consequences) of a risk event.

    Risks of Not Having a Contingency Plan


    Having no plan may slow managerial response.

    Decisions made under pressure can be potentially dangerous and costly.

    Risk and Contingency Planning


    Technical Risks
    Backup strategies if chosen technology fails. Assessing whether technical uncertainties can be resolved.

    Schedule Risks
    Use of slack increases the risk of a late project finish. Imposed duration dates (absolute project finish date) Compression of project schedules due to a shortened project duration date.

    Risk and Contingency Planning (contd)


    Costs Risks
    Time/cost dependency links: costs increase when problems take longer to solve than expected. Deciding to use the schedule to solve cash flow problems should be avoided.

    Price protection risks (a rise in input costs) increase if the duration of a project is increased.

    Funding Risks
    Changes in the supply of funds for the project can dramatically affect the likelihood of implementation or successful completion of a project.

    Contingency Funding and Time Buffers


    Contingency Funds
    Funds to cover project risksidentified and unknown.
    Size of funds reflects overall risk of a project

    Budget reserves
    Are linked to the identified risks of specific work packages.

    Management reserves
    Are large funds to be used to cover major unforeseen risks (e.g., change in project scope) of the total project.

    Time Buffers
    Amounts of time used to compensate for unplanned delays in the project schedule.

    Managing Risk (contd)


    Step 4: Risk Response Control
    Risk control
    Execution of the risk response strategy Monitoring of triggering events Initiating contingency plans

    Watching for new risks

    Establishing a Change Management System


    Monitoring, tracking, and reporting risk

    Fostering an open organization environment


    Repeating risk identification/assessment exercises Assigning and documenting responsibility for managing risk

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