Risk Management

Prepared by
Stephen Penn
October 6, 2012
Information derived or quoted from Rita Mulcahy

5 Overall Project Management
Processes with Risk Management
Plan RM
ID Risk
Qualitative
Quantitative
Plan Risk Responses
Monitor & Control Risks
ID & Managed
Risk Management Process
Threats
Opportunities
Uncertainty Lack of knowledge
Risk Factors
1. How likely a risk event will occur
2. Impact or amount at stake
3. When it will occur
4. How often it will occur
Risk Averse Some one that does not
want to take on risk
Risk Tolerance Degree of risk
acceptable
Risk Thresholds

Point at which risk
becomes unacceptable

Risk areas Project Constraints
(scope, time, cost, etc)
Concepts and Terms
Plan Risk Management
How much time should we spend?
Who will be involved?
How should we perform risk
management?

What will I have when Im done with ?
Risk Management Plan
1. Methodology
2. Roles & Responsibilities
3. Budgeting
4. Timing
5. Risk Categories
6. Definitions of probability & Impact
7. Stakeholder tolerances
8. Reporting & Tracking
Identify Risk
(tools & techniques)
Documentation Reviews Documents can help
identify risk
Brainstorming One idea generates
another
Delphi Technique Experts participate
anonymously
Interviewing Interview participants,
stakeholders, experts
Root Cause Analysis Reorganized by root
causes to find more risk
Identify Risk
SWOT Analysis Identifies strengths and
weaknesses and thus
risk
Checklist Analysis Checklist of risk
categories to identify risk
Assumptions Analysis Validate assumptions
which may lead to risk
Diagramming
Techniques
Cause and effect
diagrams and flowcharts
Outputs to Identify Risk
Risk Register Example
Qualitative Risk Analysis
Perform Qualitative (Subjective)
Risk Analysis
(Probability and Impact Matrix)

Watchlist
Risk Grouped by category
Risk Register Updates
Numerically analyzing the probability and
impact of risks
how risk could affect the objectives of the
project
1. Determine risk that warrant a response
2. Determine overall project risk
3. Determine quantified probability to meet project
objectives (e.g. 75% chance)
4. Determine cost and schedule reserves
5. Identify risks requiring more attention
6. Create realistic and achievable cost, schedule, or
scope targets.
Quantitative Risk Analysis

1. Investigate highest risks on the project
2. Determine type of probability distribution
3. Which risks have the most impact
4. Determine quantified risk through EMV
or Monte Carlo

Determine Quantitative Probability
Impact
Interviewing
Cost & Time Estimating
Delphi Technique
Use of historical records
Expert Judgment
EMV
Monte Carlo
Decision Trees
Decision Tree choose between
many alternatives
(Impact)

1. Prioritized list of quantified risk
2. Amount of contingency time and cost reserves needed
3. Realistic and achievable completion dates and project costs
4. The qualified probability of meeting objectives
5. Trends in quantitative risk analysis
Quantitative
What are we going to do now
about each top risk?
1. Eliminate the threats before they happen
2. Make sure opportunities happen
3. Decrease the probability and/or impact of threats
4. Increase the probability and/or impact of opportunities
For Residual Threats
1. Contingency Plans
2. Fallback Plans

Monitor and Control Risk
Workarounds Unplanned responses to
deal with problems
Risk Reassessments Review risk plan, risk
register and update
documentation
Risk Audits
Prepared by PM. Prove you have identified risk, have
plans for major risk, risk response owners are
prepared.
Reserve Analysis
How much reserve remains and how
much is needed (checkbook)

Status Meetings Team meetings where
risked is discussed
Closing of Risks Close finished risk to
focus on remaining risk
Outputs of Monitor & Control Risk
1. Risk Register
Updates
1. Outcomes of risk assessment and risk audits
2. Updates to risk management and ID of new
risk
3. Closing of risk
4. Details of what happened
5. Lessons learned
2. Change Requests Monitor & Control
process will uncover
changes
3. PM Plan Updates Updates to schedule,
cost, quality, hr, etc
4. Project Doc Updates
Roles & Responsibilities, stakeholder
management, quality metrics
5. Organization Process
Assets Updates
Risk templates like risk register,
checklists, and other data which
becomes historical records
Practice Exam
Practice Exam
Practice Exam
Answers
Answers
Answers