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PM0016 - Project Risk Management - Set 1

PM0016 - Project Risk Management - Set 1

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Published by Abhishek Jain

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Published by: Abhishek Jain on Aug 02, 2011
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Sem Assignment Project Risk Management
Set 1 2011
Abhishek Jain - 511035358
Page 2 of 8
Master of Business Administration-MBA Semester 4
 Project Risk Management
Assignment Set - 1
Q 1
Describe the five phases of risk management processAns:
Figure 1: Risk Management Process
The five phases of risk management process are:
Establish the context:
It establishes the boundaries within which risks will be evaluated and developsa structure for rest of the risk management process.Establishing the context is categorised into the following:
Strategic Context.
Organisational Context.
Risk Management Context.
Project Context.
Risk Appetite.Strategic context: This context is usually operated by the company. The elements that support or weaken the ability of risk management must be determined by the company. Few areas that willhelp to activate the strategic context are:
Identify the strengths and weaknesses of the organisations.
Identify the objectives of internal stakeholders.
Identify the objective of external stakeholders.
Establish communication between stakeholders.
Specify the relationship between the organisation and its environmentThe strategic context consists of financial, political, social and legal aspects of the organisationsfunctions.
Organisational Context: It is necessary to recognise the organisation’s structure, functions and goals
and find out the ways to achieve it. These goals help to determine whether risk is acceptable or notas well as provide options to handle it.To establish organisational context, you must:
Determine relationship between service delivery and government outcomes.
Find out whether legislative and statutory requirements are fulfilled.
Determine conformance to Whole-Of-Government policy and to the agency policy.The reasons to establish the organisational context are:
Sem Assignment Project Risk Management
Set 1 2011
Abhishek Jain - 511035358
Page 3 of 8
Risk management occurs within the structure of company’s objectives, goals
and strategies.
Manage the set of risks which is due to failure to accomplish certain target or specific activity.
The company policy helps in determining criteria, which in turn help you to decide whether a risk is tolerable or not. This also forms an option for treatment of risk.Risk management context: The activity to be examined is defined in this context. The objectives,scope and boundaries involved is also included in it. The risk management process establishesboundaries of activity which involves:
Defining parameters and scope of project risk.
Defining project risk extent in terms of time and location.
Identifying the need for any studies or resources.
Identifying the need for risk budget to balance costs and benefits.
Determining any issues related to special roles and responsibilities or any risk projectdependences.The analysis in risk management context is done on the basis of type of risk and the information thatneed to be communicated and the methods of communication. Analysis required can bedetermined by the combination of the following:
Level of complication in the activity.
Interaction with stakeholders to convey required information.
Type of project risks.
Activities which are important to achieve project goal.Project context: The business need of the proposed project must be clearly outlined. To understandthe project context the below mentioned areas must be evaluated, that are:
Relationship between risk project and government outcomes.
Relationship between risk project and company output.
Changes in business process, management teams and any other related procedures.Risk appetite: Before taking any actions that you find necessary to handle the risk, you must firstdetermine the amount of risk the company will be ready to tolerate.The risk that is considered as tolerable depends on the perceived significance of particular risks. For example, the tolerable financial loss in an organisation depends on a range of features whichinclude budget, source of loss and other risks related to poor publicity or image issues. This particular risk can cause number of effects. An effect of financial loss may tolerable, however, the associatedeffect that is related to harm to health or damage to safety may not be tolerable.
Identify risks:
After establishing the context the next step is to identify the possible risks. This step helpsyou to identify the sources of risk in an organised way. There are two levels to risk identificationprocess, which include:
Risk Stage
Risk Register Risk stages: To undertake a project, there are several stages. For example, stages for an asset willinclude:
Validate extra sites
Identify extra assets
Approval to dispose assets
Register sites in Government Land Register (GLR)
Find out methods of disposal
Contract and negotiation
Maintenance and settlement.Risk register: Records all the risks present in each project. These risks can be due to natural disaster,political issues, commercial and legal issues, technical issues or issues raised due to economiccircumstances.
Experts’ knowledge helps to easily identify risks in a project. The primary goal of risk identification is to
have a detailed list of risks that affects the organisations objectives.
Analyse risks:
Risk analysis helps to distinguish minor risks from the major risks. It also helps inevaluation and treatment of risks. Analysing risks involves finding out sources of risks, possibility of risksand the outcomes.The probability and effects of the risk are combined to produce a level of risk. Statistical analysis andcalculations are use to find out the probability and effects of the risk. If no past record is available todetermine the possible outcomes, then an estimate is made about a particular event and itsoutcome.There are three types of risk analysis, they are:

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