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RISK MANAGEMENT PLAN

Project Title: Date Prepared:

Methodology

The technique for each process will be: 1) Engage stakeholders


with meetings and personal interviews to know their tolerance and
expectations. 2) Identify risks by using assumptions and SWOT
analysis. 3) Develop a probability and impact matrix, plus risk
categorization, as a first pass. Then apply it to the risk data quality
assesment and risk urgency assesment. 4) Quantitative risk
analysis will only be done for top risks using Monte Carlo
analyses. 5) Appropriate strategies will be developed for threats
and opportunities. 6) A risk audit will be performed at regular
intervals, and reserve analysis review will be done every six
months.

Roles and Responsibilities

The risk owner will be for all risks (the same as the "risk
manager"). The project manager will be responsible for
coordination, while the project sponsor will manage all external
stakeholders.

Risk Categories
Risks will be organized as follows to the first level of the RBS: 1)
Strategic 2) Financial 3) Procedural 4) Other

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RISK MANAGEMENT PLAN
Risk Management Funding

Some experts should be hired for various periods with a limited of


budget (not exceeding $500,000 USD). All of the risk jobs related
to offshore civil works will be given to a third party due to a lack of
company experience

Contingency Protocols

All budget items should have a contigency amount of no less then


10% of the variance if you are not enough confident of the most
likely figure estimate (the same for duration estimates)

Frequency and Timing

Risk indentification will be performed during the preliminary stage


of the project; it will be repeated during scope changes and during
monitoring and controlling of risks.
Stakeholder Risk Tolerances

Scope: low Quality: low Schedule: medium Cost: low

Tracking and Auditing

Risk audit will be performed once per month, while risk


reassesment will be done for each change in the project scope. A
risk data quality assesment should be done after the first turn of
risk identification and before doing qualitative risk analysis (but
should also be done upon each special issue).
Risk Register (Record 1)
Project Title: Date Prepared:

Risk ID 1 Risk Description If inverter manufacturer declares default, some deliveries will be not done according to the schedule, causing a delay of 2 weeks
on contractual completion
Status open Risk Cause Manufacturer default

Impact
Score (*) Responses
Scope Quality Schedule Cost
Probability 20.00%
125,000 25000 Looking for some inverters available on the market

Revised 10.00% Revised Impact Revised Score (*) Risk owner


Probability Actions
Scope Quality Schedule Cost
50,000 5000 Mr. Howard sign contract with new
supplier
Secondary Risks Customer missed approval during acceptance test

Residual Risk New supplier could deliver inverter that is not the same quality level

Contingency Plan Contingency Funds 50000

Hire an inverter installation expert Contingency Time 1 month

Fallback Plans Ask supplier to cross-check customer acceptance creteria to be prapared for product modification.

Comments We should verify the project economical company situation of our inverter supplier.
Risk Register (Record 2)
Project Title: Date Prepared:

Risk ID 1 Risk Description If inverter manufacturer declares default, some deliveries will be not done according to
on the contractual completion
Status open Risk Cause Manufacturer default

Impact
Score (**)
Scope Quality Schedule Cost
Probability high
medium 0.08

Example of numeric score Revised medium Revised Impact Revised Score (**)
Probability
Scope Quality Schedule Cost
low 0.03

Example of relative score Secondary Risks customer missed approval during acceptance test

Residual Risk new supplier could deliver inverter of not the same quality level

(*) prob*impact Contingency Plan

(**) you should find the relative hire an inverter installation expert

percent into the third tab both Fallback Plans ask supplier to cross check customer acceptance creteria to be prapared for product modification
probability and impact
Comments We should best verified , for new project economical company situation of our inverter supplier
will be not done according to the schedule, causing a delay of 2 weeks

Score (**) Responses

0.08 looking for some inverters available on


the market
Revised Score (**) Risk owner
Actions

0.03 Mr. Howard sign contract with


new supplier

Contingency Funds 50,000

Contingency Time 1 month


IMPACT ASSESSMENT
Element Rating Threats
Scope impact Very high The product does not meet the objectives and
is effectively useless.
High The product is deficient in multiple essential
requirements.
Medium The product is deficient in one major requirement
or multiple minor requirements.
Low The product is deficient in a few minor requirements.

Very Low Minimal deviation from requirements.


Quality impact Very high Performance is significantly below objectives
and is effectively useless.
High Major aspects of performance do not meet
requirements.
Medium At least one performance requirement is significantly
deficient.
Low There is minor deviation in performance.

Very Low Minimal deviation in performance.

Schedule impact Very high Greater than 20% overall schedule increase.

High Between 10% and 20% overall schedule increase.

Medium Between 5% and 10% overall schedule increase.

Low Noncritical paths have used all their float, or overall


schedule increase of 1% to 5%.
Very Low Slippage on noncritical paths but float remains.

Cost impact Very high Cost increase of greater than 20%.

High Cost increase of 10% to 20%.

Medium Cost increase of 5% to 10%.

Low Cost increase that requires use of all contingency funds.

Very Low Cost increase that requires use of some contingency but some contingency funds remain.
PROBABILITY ASSESSMENT
Probability Very high The event will most likely occur: 80% or
greater probability.
High The event will probably occur: 61% to 80% probability.

Medium The event is likely to occur: 41% to 60% probability.

Low The event may occur: 21% to 40% probability

Very Low The event is unlikely to occur: 1% to 20%


RATING ASSESSMENT
Rating Threats
High Any event with a probability of medium or above and a very high impact on any objectiv
Any event with a probability of high or above and a high impact on any objective.
Any event with a probability of very high and a medium impact on any objective.
Any event that scores a medium on more than two objectives.
Medium Any event with a probability of very low and a high or above impact on any objective.
Any event with a probability of low and a medium or above impact on any objective.
Any event with a probability of medium and a low to high impact on any objective.
Any event with a probability of high and a very low to medium impact on any objective.
Any event with a probability of very high and a low or very low impact on any objective.
Any event with a probability of very low and a medium impact on more than two objectiv
Low Any event with a probability of medium and a very low impact on any objective.
Any event with a probability of low and a low or very low impact on any objective.
Any event with a probability of very low and a medium or less impact on any objective
Opportunities
Scope requirements met with significant
decrease in effort and/or cost.
Scope requirements met with noticeable improvement in effort
and/or cost.
jor requirement Scope requirements met with minimal improvement in effort
and/or cost.
minor requirements. Insignificant impact.

Insignificant impact.
Significant improvement in outcomes/
rework rate.
Noticeable improvement in outcomes/rework rate.

ment is significantly Some reduction in rework rate.

Insignificant impact.

Insignificant impact.

Greater than 20% overall schedule decrease.

hedule increase. Between 10% and 20% overall schedule.

edule increase. Between 5% and 10% overall schedule decrease.

eir float, or overall Noncritical paths have used all their float, or overall
schedule decrease of 1% to 5%.
float remains. No change on critical path duration.

Cost decrease of greater than 20%.

Cost decrease of 10% to 20%.

Cost decrease of 5% to 10%.

all contingency funds. Cost decrease of <5%.

some contingency but some contingency funds remain. Insignificant impact.

The event will most likely occur: 80% or


greater probability.
% to 80% probability. The event will probably occur: 61% to 80% probability.

to 60% probability. The event is likely to occur: 41% to 60% probability.

The event may occur: 21% to 40% probability.

The event is unlikely to occur: 1% to 20%.


Opportunities
edium or above and a very high impact on any objective. Any event with a probability of medium or above and a very high impact on
gh or above and a high impact on any objective. Any event with a probability of high or above and a high impact on any obj
ery high and a medium impact on any objective. Any event with a probability of very high and a medium impact on any obje
n more than two objectives. Any event that scores a medium on more than two objectives.
ery low and a high or above impact on any objective. Any event with a probability of very low and a high or above impact on any
w and a medium or above impact on any objective. Any event with a probability of low and a medium or above impact on any
edium and a low to high impact on any objective. Any event with a probability of medium and a low to high impact on any ob
gh and a very low to medium impact on any objective. Any event with a probability of high and a very low to medium impact on a
ery high and a low or very low impact on any objective. Any event with a probability of very high and a low or very low impact on
ery low and a medium impact on more than two objectives. Any event with a probability of very low and a medium impact on more tha
edium and a very low impact on any objective. Any event with a probability of medium and a very low impact on any obje
w and a low or very low impact on any objective. Any event with a probability of low and a low or very low impact on any ob
ery low and a medium or less impact on any objective Any event with a probability of very low and a medium or less impact on an
ovement in effort

ement in effort
ove and a very high impact on any objective.
and a high impact on any objective.
a medium impact on any objective.
two objectives.
a high or above impact on any objective.
dium or above impact on any objective.
a low to high impact on any objective.
ry low to medium impact on any objective.
a low or very low impact on any objective.
a medium impact on more than two objectives.
a very low impact on any objective.
or very low impact on any objective.
a medium or less impact on any objective.
PROBABILITY & IMPACT MATRIX
The Probability and Impact Matrix is a grid for mapping the probability of each risk
occurrence and its impact on project objectives if that risk occurs. The Probability and Impact
Assessment determines the probability and impact of the risk. It may be constructed for
threats and opportunities. This matrix provides a helpful way to view the various risks on the
project and prioritize them for responses. It also provides an overview of the amount of risk
on the project. The project team can get an idea of the overall project risk by seeing the
number of risks in each square of the matrix.

The organizations overall risk tolerance is usually indicated by the shading or range of cells within the
matrix. For example, an organization with a low risk threshold may rank events that fall in the very high
or high range for both impact and probability as high risk. An organization with a higher risk threshold
may only rank risk with a very high probability and impact as high risk.

The organization may use the relative risk rankings to specify what type of risk response
should be taken.

For example, the organization may specify an avoidance strategy for all threats that are ranked as high
risks.

A project with many risks in the dark gray zone will need more contingency to absorb the risk, and
likely more time and budget to develop and implement risk responses. In some situations, a decision is
made not to pursue a project because there is more risk than the organization is willing to absorb.

A sample Probability & Impact Matrix follows. The needs of your project will determine the exact layout
of the matrix.

The Probability & Impact Matrix can receive information from:


• Probability and Impact Risk Assessment
• Risk Register
It provides information to the Risk Register.
PROBABILITY & IMPACT MATRIX

Very High
High
Medium
Low
Very Low

Very Low Low Medium High Very High


of cells within the
fall in the very high
gher risk threshold

isk response

t are ranked as high

b the risk, and


ations, a decision is
ling to absorb.

ne the exact layout


Risk ID Status Risk Description
Risk Cause Probability Impact

Scope Quality Schedule


act Score (*) Responses Revised Probability

Cost
Revised Impact Revised Score (*) Risk owner

Scope Quality Schedule Cost


Actions Secondary Risks Residual Risk
Contingency Plan Contingency Funds Contingency Time

Overall Contingency Budget 0


Fallback Plans Comments