Project Risk Management Knowledge Area

by

Lisa Forbes

An assignment submitted in partial fulfillment of the requirements for the course CS4035EB- Project Management

Instructor: Mr. Rohan Simpson

Date: October 6, 2013

Department of Communication and Information Technology Bethlehem Moravian College

........................................................Table of Contents Literature Review................................................................................................4 Findings...........8 References....................................................5 Conclusion...........................................................................................................................................................................................9 Abstract 2 .......................................................................................................................................

quality. the result would be a successful project being launched. This research will be focusing on the Risk Management Knowledge Area which consists of six processes. some of which may be combined into one step. scope. time. 3 . cost. communication. and procurement management. By putting these nine areas to the task. The researcher will seek to find out how Risk Management Knowledge Area may be employed in the life of a project to increase the probability of the project success.Project Management has nine knowledge areas. risk. which are: project integration. human resource.

Risk Management planning is therefore inevitable for the success of projects. This research will focus on the area of Risk Management as the researcher believes that even though all the knowledge areas are important. Risk Management is therefore the practice of deciding and documenting how to conduct risk management activities. Successful organizations create projects that produce desired results in established time frames with assigned resources. 3rd Edition p. 4 . has positive or negative impact on a project’s objectives. businesses are increasingly driven to find individuals who can excel in this project oriented environment. (Portney. Risks are inevitable in a project’s life cycle and as such every project has some level of uncertainty. There are nine project knowledge areas each of which are strategically coordinated to bring about the successful completion of projects. if occurs. As a result. 9).Literature Review Fuller 2008 defines a project as a planned undertaking of related activities to reach an objective that has a beginning and an end. Consequently knowledge on how to mitigate these risks when they occur is of utmost importance. a risk is an uncertain event or condition that. because there are no guarantees on any project. According to the Project Management Body of Knowledge Guide (PMBOK). Risk Management is essential because every project will encounter some amount of risk during its life cycle.

5 . known risk and unknown risks. identification. The objectives of risk management are to increase the probability and impact of positive events and decrease the probability and impact of events adverse to project objectives. and monitoring and control of a project. Risk identification is an iterative process that is done throughout the entire project’s life cycle. Known risk is the risk that has been identified and can be analyzed. are qualitative risk analysis and quantitative risk analysis.Findings Project risk management encompasses the processes for conducting risk management planning. and resources losses. The subsequent paragraph that follows will briefly explain each components of project risk management. lack of resources. Risk analysis like risk identification should not be done once but continuously throughout the life of the project. and external dependencies. should be managed proactively. The PMI PMBOK identifies a number of approaches to risk analysis. Such risk includes: unexpected legal changes. analysis. Two high level approaches applies best to most projects. responses. such risk includes but are not limited to the aspect of the project environment for example poor management practices. Both type of risks. Risk are usually categorized into two broad categories. natural disasters. Risk analysis is mainly concerned with prioritizing and classifying risks and then deciphering which risks require the development of mitigation strategies and or contingency plans. An unknown risk is risk that has not yet been identified. PMI PMBOK defines risk identification as the process of determining which risk might affect the project and then documenting characteristics of those risks.

Probability Distribution. scope and quality. the corresponding impact on project objectives if the risks do occur as well as other factor such as the time frame and risk tolerance of the project’s constraints cost. Risk Response planning includes the identification and assignment of one or more persons to take responsibility for each assigned risk and defines the actions to be taken against the risk through the development of measures and actions plan to respond to risk should it occur. Qualitative risk analysis assesses the priority of identified risks using their probability of occurrence. Risk Response actions may include: • Mitigation: risk mitigation involves taking early action to prevent or reduce the likelihood of risk. 782) defines Risk Response planning as the process of developing options and actions to enhance opportunities and to reduce threats to project objectives. Probability and Impact Analysis. It analyses the effect of those risk events and assigns a numerical rating to them. schedule. Sensitivity Analysis.According to PMI PMBOK Qualitative Risk Analysis is a method used for prioritizing the identified risks for further action. Qualitative Risk Analysis is performed on risk that have been first prioritized by the Quantitative Risk Analysis process as potentially and substantially impacting the project’s competing demands. (Kerzer pg. Decision Tree and Modeling and Simulation. 6 . There are other risk management analysis tool/techniques that can be used such as Process Assessment. At completion it also presents a quantitative approach to decision making when uncertainty arises.

monitoring risk symptoms and triggers. risk management status should be included. and reviewing the execution of risk responses strategies while evaluating their effectiveness. and planning for risk. 788) is the process of analyzing. this practice should also include review and update of risk. Risk Reporting is the process of regularly reviewing and providing status about identified risk. • Acceptance: risk acceptance involves acknowledging the risk as part of the project and accepting the consequences of its occurrence. keeping track of identified risks.• Contingency: contingency plans define actions to be taken in response to identified risk triggers in hopes of reducing potential project impact from identified risk. Project work should be continuously monitored for updates and changes. Risk monitoring and control according to (Kerzer pg. • Transfer: risk transfer involves shifting the responsibility/ownership of the risk to another party. 7 . and analyzing existing risks. When reporting or reviewing project progress. This can be achieved by purchasing insurance against that type of risk • Avoidance: risk avoidance involves changing the project to eliminate the threat from identified risk. The project manager is ultimately responsible for managing risks and should regularly review and update the status of each identified risk and ensure that risks are under control.

Risk management should not be treated as a separate project office assigned to the risk management department but rather as a sound aspect of project management. The project manager must rely upon sound judgment and the use of appropriate tools in dealing with risk.Conclusion Project risk management is an iterative process that begins in the early phases of a project’s life and is conducted throughout the project’s life cycle. positive rather than negative and should seek to enhance the best probability of the project success. Proper risk management should be proactive rather than reactive. therefore a one size fits all approach cannot be used for all project circumstances. or minimize the impact of risk on the project. avoid. however. It must be noted that not all risks can be eliminated. There is no single answer on how to manage risks. 8 . It is the practice of systematically thinking about all possible outcomes before they happen and defining procedures to accept. mitigation and contingency plans can be developed to lessen their impact if they occur.

Portney. Project Management: A Process and Team Approach 1st Ed. Project Management Institute Inc. © 2009 Fuller.d) from http://www. S E Project Management for Dummies 3rd Edition. http://my. (2008).wikihow.References A Guide to the Project Management Body of Knowledge 4th Edition. Wiley Publishing.safaribooksonline. New Jersey: John Wiley & Sons Inc. Inc .com/book/certification/pmp/9780470479582/initiating/introducing_t he_project_management_knowl Web Site 9 . N.com/book/certification/pmp/9780470479582/initiating/introducing_t he_project_management_knowl Web Site . Prentice Hall Kerzer.G.. H (2009). (n.com/Develop-a-Risk-Management-Plan Web Site: http://my.safaribooksonline. 10th Edition Project Management: A System Approach to Planning Scheduling and Control.

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