PROJECT RISK PLANNING

Risk management is a branch of project management concerned with the management of

potential project hazards.
Risk management is the activity of detecting, analysing, and preventing or reducing risks to a
project that have the potential to affect the desired results in project management. It is
basically about taking a look at your project objectives and figuring out what the dangers are
to those objectives, and what you can do to address them right away,” says one expert.
To effectively manage risk, project managers must have a comprehensive knowledge of their
goals so that they can spot any potential roadblocks that may impede the team's ability to
deliver outcomes.
Any unforeseen occurrence that might have an impact on the people, procedures, technology,
or resources engaged in a project is referred to as a risk. Risks, unlike 'problems,' are
occurrences that may or may not occur, and you may not be able to predict when they will
occur. Project risk, as a result of this uncertainty, need planning in order to effectively
manage it.
Components
1. Risk event
The term "risk event" refers to a specific type of uncertainty that may be recognised,
analysed, and managed as part of the Project Risk Management process: A risk event is an
unforeseen occurrence or combination of circumstances that, if it occurs, will have an impact
on one or more project objectives.
Any unpredictable occurrence or circumstance that might have an impact on your project is
referred to be a risk. Not all dangers are bad. Some circumstances (such as finding a simpler
way to do a task) or occurrences (such as decreased pricing for specific goods) may be
beneficial to your project. When this occurs, we refer to it as an opportunity, but it is still
treated as a risk/ threats
2. Risk event probability
The likelihood of a risk event occurring is known as risk probability. The probability can be
stated both qualitatively and quantitatively. Term like common, probable, rare, and so on are
used when discussing probability in a qualitative way.
3. Risk event impact or consequences
This is a possible result of the situation. It is the influence on the Critical Success Factors that
emphasises the importance of risk management.
4. Risk Value
A risk value is a calculation that multiplies likelihood by effect to determine the cost of a risk.
A risk value is based on estimations that may or may not be correct in the future. As a result,
they are regarded as a prediction.
Risk value should not be confused with value at risk, which is a risk management metric for
investors.
 RISK PLANNING
1. Risk Identification
The process of identifying hazards that might hinder a programme, business, or investment
from reaching its goals is known as risk identification. It entails recording and disclosing the
problem. The process of identifying and recording the risks that may impact the project is
known as risk identification.
The ability to identify current risks and use the project team's knowledge and abilities to
predict risk occurrences is a major benefit of this approach.
Inputs-
 Plan for Risk Management and Project Management
 Timeline, Budget, and Communication
 SWOT
 Baseline in terms of quality and HR scope
 Estimates of activity resource and duration
 Stakeholder register
 Papers related to the project Procurement documents
 Enterprise environmental factors
 Organizational process assets
Tools-
 Documentation Reviews
 Information Gathering
 Techniques
 Checklist analysis
 Assumptions Analysis
 Diagramming Techniques
 SWOT Analysis Expert Judgment
2. Risk Analysis and prioritization
A Risk Analysis might reveal a number of hazards that appear to be of equal severity or
rating. When there are too many hazards concentrated at or around the same level, a strategy
for prioritising risk responses and allocating limited resources is required.
When it comes to risk prioritisation, you should prioritise high impact and high probable risks
first.
3. Risk resource planning
 RISK BREAKDOWN STRUCTURE
A risk breakdown structure, or RBS for short, is a hierarchical chart that breaks down project
hazards from higher-level categories to lower-level risk categories.
The risk breakdown structure, like the work breakdown structure (or WBS), provides a
framework for categorising and prioritising the risks involved with any particular project,
making it simpler for project managers to prepare for and minimise their effects.
The risk breakdown structure shown above, for example, divides project risks into four
categories: technical, external, organisational, and project management.
The project manager might then proceed to list more detailed subcategories.
 Requirements
 Technology
 References and complexity
 Process
 Analytical
From here, the project manager's RBS process would continue as the PM began to identify
the particular risks associated with each categorization.
A risk breakdown structure may assist PMs get a more organised picture of the risks
associated with a project, as well as better allocate resources and prepare for the positive and
negative consequences of identified risks.
Inputs Tools Output
Qualitative Risk  Risk management plan  Risk probability &  Project document
Analysis  Risk register impact assessment (updates)
 Scope baseline  Probability & impact
 Organizational process matrix
assets  Risk data quality
 Enterprise environmental assessment
factors  Risk categorization
 Risk urgency
assessment
 Expert Judgment
Quantitative Risk  Risk management plan  Data gathering &  Project document
Analysis  Risk register representation (updates)
 Scope baseline techniques
 Schedule management  Quantitative risk
plan analysis
 Cost management plan & modeling
 Enterprise environmental techniques
 Organizational process
assets
 PROBABILITY IMPACT MATRIX
One of the tools and methodologies used in the PMI process to undertake qualitative risk
analysis is a probability and impact matrix. It is a part of the risk management strategy. The
matrix is a table that displays the likelihood of prospective hazards vs the severity of the
impact on the goals.
Important pointers to create probability impact matrix
 Make a decision on which data to use.
 Make a decision about the size of your matrix....
 Make a list of events that should be included in the risk matrix.
 Collect data on the impact and probability of something happening.
 Fill in the Impact and Probability Data fields.
 Determine the best method for categorising impact data.
 Decide on a method for categorising probability data.
 Draw the Probability-Impact Risk Matrix's Outlines
 Organize Events in the Appropriate Sectors
 Keep a record of your decisions.