Understanding Risk Management

The objectives of Project Risk Mgmt is to:
Increase the probability &Impact of positive events
Decrease the probability &Impact of negative events

Risk Management processes:

• Plan Risk Mgmt
• Identify Risks
• Perform Qualitative Risk Analysis
• Perform Quantitive Risk Analysis
• Plan Risk Responses
• Monitor &Control Risks

1. Plan Risk Mgmt

How to conduct risk mgmt activities?

This process should start as early as a project is conceived and completed early during project planning

Output is a Risk Mgmt Plan which can include:
- Methodology
- Roles & Responsibilities
- Budgeting
- Timing
- Risk Categories
- Definitions of Risk Probability & Impact
- Probability & Impact Matrix
- Revised Stakeholders' tolerances
-Reporting formats
-Tracking

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2. Identify Risks

Determining which risks affect my project
and documenting their characteristics
All project personnel should be involved in identifying risks from their perspectives

Output here is a 'Risk Register'
which should include
- List of identified risks
-List of potential responses

Identifying Risks has many techniques, we can mention:
- Brainstorming
- Delphi Technique (Interviewing Experts)
- Checklist Analysis, based on historical information or other similar sources
- Assumptions Analysis

- Diagramming Techniques
- SWOT Analysis (strengths, weaknesses, opportunities, and threats)

3. Qualitative Risk Analysis

Prioritizing Risks.
for further analysis or action
by assessing and combining
Probability & Impact.

Probability & Impact Matrix Example

4. Quantitive Risk Analysis

Numerically analyzing
the effect of identified risks on overall project objectives

Important to notice:

Qualitative Analysis comes BEFORE
Quantitive Analysis
First we prioritize
then we engage in calculating

Quantitative Risk Analysis and Modeling Techniques:
- Sensitivity Analysis :measures extent of effects
- Expected Monetary Value Analysis (EMV): statistical concept
- Modeling & Simulation: translates potential impacts

EMV sample

Simulation sample (cost)

5. Plan Risk Responses

Developing options & actions to enhance opportunities and reduce threats to project objectives

Strategies for Negative Risks:
-Avoid
- Transfer
- Mitigate
- Accept

Strategies for Positive Risks:
-Exploit
- Share
- Enhance
- Accept

Residual Risks : Risk expected to remain after planned responses have been taken

Secondary Risks : Risks that arise as a direct outcome of implementing a risk response

6. Monitor & Control Risks

Implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project

Hope you BENEFITTED!