Risk Management

Nitesh Kumar,
Asst. Professor,
LPU
 What is Risk?
• PM-BOK defines risk as
• ‘ an uncertain event or condition that, if
occurs, has a positive or negative effect on a
project’s objective’.
• This is 6th step of step wise planning
approach.
 ‘Step Wise’ - an overview
0.Select
1. Identify project 2. Identify project
project objectives infrastructure

3. Analyse
project
characteristics
Review
4. Identify products
and activities

5. Estimate effort
Lower for activity activity
level For each
detail 6. Identify activity
risks
10. Lower level
7. Allocate
planning
resources

8. Review/ publicize
9. Execute plan plan
3
 Key elements of Risk
• It relates to the future.
– Speculation about future
• It involves cause and effect.
– Each risk has some effect on project
 Categories of Risk
• Project risks:
– Are those that could prevent the achievement of given
objective
• Business Risks
 Socio-technical model by Lyytinen:
 It has four categories of risks:
 1.Actor
 2.Technology
 3. Structure
 4.Tasks
 Socio-technical model

ACTOR

Structure Technology

Task
 Framework for dealing with Risk
1. Risk Identification
2. Risk Analysis and prioritization
3. Risk Planning
4. Risk Monitoring
 1.Risk Identification
• Two main approaches:
1. Checklist
2. Brainstorming
3. Causal mapping
 Causal mapping
• It represents chain of causes and effect that
will influence the outcome of particular area
of activity
• Node represents various factors
Example
 Risk Assessment
 There are endless list of risk with every project
 So we need to distinguishing the more
damaging and likely risks
 Risk exposure= (potential damage) x (probability)
 Risk Planning
• Tells how to deal with risk.
• Four Methods are:
– Risk acceptance
– Risk avoidance
– Risk reduction
– Risk transfer
 Risk Management
• Contingency
– Contingency plan
– Risk reduction
• Deciding on the risk action
– Risk action requires resource and money
– So which for which risk we should take actions
• Risk reduction leverage
• RRL= Rebefor –Reafter/(cost of risk reduction)