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Project Risk Management

BySami Fahmy, Ph.D, P. Eng, PMP

ENG M 680

Lecture 1

Introduction to Risk andRisk Management

Agenda

•Introduction to general risk•Definition of risk and relatedtopics•Personal approach to risk•Types of risks•Risk factors•Risk in a project environment•Risk management processes

Course Objective

•Learn how to manage risk more effectively•Become familiar with risk and relateddefinitions•Identify and understand techniques for determining risk source•Identifying causes and effects of the risks•Develop a frame of work that will help youmake decisions•Learn more about your own willingness totake risks

Risk

A course of action or inaction takenunder conditions of uncertainty whichexposes the risk taker to possibleloss, or gain to reach a desiredoutcomeAn undesirable situation or circumstance that is likely to cause aharm or a loss

RISK isEverywhere

Risk is all around us

•To live is to risk dying•To laugh is to risk appearing thefool•To hope is to risk despair •To love is to risk not being loved inreturn

CanWeEliminateRisk?CanWeAvoidRisk?

Let us think about risk

One who risks nothingDoes nothingHas nothingand is nothing

3 Types of Personal Risk

•Physical risk•Emotional risk•Financial risk

Why People take Risks

•Profit•Rewards•Excitement•Benefits•Stupidity

What is the biggest risk youhave ever taken?

•What was your greatest fear?•How did you feel?•Were you discouraged or encouragedby others?•What is the worst that could happen?•What is the best that could happen?

Risk Guiding Principles

•Learning and personal growthrequires taking risks•Take only these risks, where youcan handle the loss•Adjust risks that are too much togamble with•Accept that the price of risk is anoccasional failure

Hazard is

•An situation or condition thatis likely to cause a harm or aloss under certaincircumstance (Dangerouscondition)•Hazard is a prerequisite torisk•Hazard is a condition not anevent

Risk tolerance

•The amount of risk that isacceptable to the individual,organization or client•It may be different from theindividuals working in thatorganization

Issues, Problems, and Risks

•Issues: any thing that requires theproject manager attention•Problem: A thing or an event that hasgone wrong and require action tocorrect•Risk:Potential problem or event thatmay occur and if it occurs will causeharm

Crisis

•An unplanned event or possiblesituation which triggers a real or perceived or possible threat to safety,health or to the environment or to to anorganizational reputation

UnderstandingRisk

Understanding Risk

•Risk happens as a result of a cause•If it happens ( Probability)•it will result in (an impact or effect)•Examples