Risk Treatment

Dr. Keith Harrison

DMS Risk SME Thales
Secretary APM Risk SIG
Risk Process

PRAM 2004
Initial Assessment (PID)
THREAT OPPORTUNITY
Very High Very High
PROBABILITY

PROBABILITY
High High

Medium Medium

Low Low

Very Low Very Low

Very Low Low Medium High Very High Very High High Medium Low Very Low

IMPACT BENEFIT

• Do we want to treat all risk the same?

• Treat Threats different to Opportunities
• Remove all Threats?
• Take all Opportunities?
• Prioritize Effort
• Different Depending on PID location
• Order of Treatment
Treatments

 Threats  Opportunities
Avoid Terminate
Exploit
Transfer Transfer
Share
Mitigate Treat
Enhance
Accept Tolerate
Reject

Plan Fallback/Option
 Plan of what to do if the risk occurs
 Trigger Point
 THREAT OPPORTUNITY
Very High Very High

PROBABILITY

PROBABILITY
High High

Medium Medium

Avoid/Exploit Low

Very Low

Very Low Low Medium High Very High Very High High Medium Low Very Low
Low

Very Low

IMPACT BENEFIT

 Change Objectives or Practices

 Limited Scope
 Project Type and Lifecycle dependent
 Opportunities
Threats
 Change Objectives (e.g. Requirements Change)
– Easier
Difficultfor Win-Win
after Contract Awardall(Project
(Satisfies Approval)
stakeholders)
– Difficult after Contract
Unacceptable Award (Project
to Stakeholders Approval)
(Customer)
 Change Practices (e.g. Sub-contractor)
Sub-contractor)
– Easier – Internal to Project
– Easier – Fixed/Firm Price Contract
 THREAT OPPORTUNITY
Very High Very High

PROBABILITY

PROBABILITY
High High

Medium Medium

Low Low

Transfer/Share Very Low

Very Low Low Medium

IMPACT
High Very High Very High High Medium

BENEFIT
Low Very Low
Very Low

 Give the Risk Customer

to someone else
 Down side
Company
(Pool)
Project Insurance
– Cost
– Retained Element
Sub-Contractor

 Risk should be held by the Person

best placed to manage it
Mitigate/Enhance
THREAT OPPORTUNITY
Very High Very High

PROBABILITY

PROBABILITY
High High

Medium Medium

Low Low

Very Low Very Low

Very Low Low Medium High Very High Very High High Medium Low Very Low

IMPACT BENEFIT

 Main method of Treatment

 Two Approaches
 Effect the Cause - Change Probability
 Effect Impact
 Undertaken by whoever is best placed to do the action
 Cost effective £ < DPI
 Funding - Project Contingency
 THREAT OPPORTUNITY
Very High Very High

PROBABILITY

PROBABILITY
High High

Accept/Reject
Medium Medium

Low Low

Very Low Very Low

Very Low Low Medium High Very High Very High High Medium Low Very Low

 Do ‘Nothing’ Option IMPACT BENEFIT

Threats
– Active Decision
 Other Treatments not viable
Monitor
• Technical/Financial
 Plan Fallback
• Prob =VH, Impact =VL (Add to baseline - Raise Opportunity)
 Level of Threat Acceptable (Prob =L, Impact =Low)

Opportunity
Other Treatments not viable (Financial)
Not in line with Company’s Strategic Direction
 Questions
Avoid Change project scope Exploit

Proactive Responses
Plan Plan
Insure Invest
fallback option

Reduce Enhance Opportunity

Pool Threat Pool
probability probability

Reduce Enhance
Share Share
negative positive
contractually contractually
impact impact

Reactive Reactive Realise

fallback Responses opportunity

Accept Record or Monitor Reject

PRAM 2004