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CHAPTER 7:
UNIVERSITY OF FINANCE - MARKETING
FACULTY OF BUSINESS ADMINISTRATION MANAGING RISK

CHAPTER 7:
MANAGING RISK

Course ID number: 1931101013902

QUẢN TRỊ DỰ ÁN

You’ve got to go out on a limb sometimes because that’s where

the fruit is.
Lecturer: Dr. PHAM HAI CHIEN
January, 2021 —Will Rogers—
Faculty of Business Administration
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LEARNING OBJECTIVES CHAPTER OUTLINE

1. Describe the risk management process. 1. Risk Management Process

2. Understand how to identify project risks. 2. Step 1: Risk Identification
3. Assess the significance of different project risks.
3. Step 2: Risk Assessment
4. Describe the four different responses to managing risks.
5. Understand the role contingency plans play in risk 4. Step 3: Risk Response Development
management process.
5. Contingency Planning
6. Understand opportunity management and describe the four
different approaches to responding to opportunities in a 6. Opportunity Management
project.
7. Contingency Funding and Time Buffers
7. Understand how contingency funds and time buffers are
used to manage risks on a project. 8. Step 4: Risk Response Control
8. Recognize the need for risk management being an ongoing 9. Change Control Management
activity.
9. Describe the change control process 10. Summary
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1. RISK MANAGEMENT PROCESS 1. RISK MANAGEMENT PROCESS

Risk Event Graph

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2. STEP 1: RISK IDENTIFICATION 2. STEP 1: RISK IDENTIFICATION

Organizations use Risk Breakdown Structures (RBSs) A risk profile is a list of questions that address traditional
areas of uncertainty on a project.

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3. STEP 2: RISK ASSESSMENT 3. STEP 2: RISK ASSESSMENT

1. Scenario analysis is the easiest and most commonly Risk Assessment Form

used technique for analyzing risks in terms of:

 Probability of the event.

 Impact of the event.

 Risk Value = Impact × Probability

2. Probability Analysis
 PERT (Program Evaluation And Review Technique) and PERT
simulation can be used to review activity and project risk.

3. Sensitivity analysis
Risk Severity Matrix
4. Decision trees
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4. STEP 3:RISK RESPONSE DEVELOPMENT 5. CONTINGENCY PLANNING

1. Escalating Risk  A contingency plan is an alternative plan that will be used if

a possible foreseen risk event becomes a reality.
2. Mitigating Risk
 Some of the most common methods for handling risk are:
3. Avoiding Risk technical risks, schedule risks, cost risks, funding risks.
 Risk Response Matrix:
4. Transferring Risk
5. Accepting Risk

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6. OPPORTUNITY MANAGEMENT 7. CONTINGENCY FUNDING AND TIME BUFFERS

1. Escalating Opportunity 1. Escalating Risk
2. Exploiting Opportunity 2. Mitigating Risk
3. Sharing Opportunity
3. Avoiding Risk
VS
4. Enhancing Opportunity 4. Transferring Risk
5. Accepting Opportunity 5. Accepting Risk
1. Contingency funds are established to cover project
risks—identified and unknown.
 Budget reserves are set up to cover identified risks; these
reserves are those allocated to specific segments or
deliverables of the project.
 Management reserves are set up to cover unidentified risks and
are allocated to risks associated with the total project.

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7. CONTINGENCY FUNDING AND TIME BUFFERS 8. STEP 4: RISK RESPONSE CONTROL

1. Time buffers to cushion against potential delays in the 1. Risk control involves executing the risk response
project. strategy, monitoring triggering events, initiating
contingency plans, and watching for new risks.
2. For example, buffers are added to:
 Activities with severe risks. 2. Document: issue log, lesson learned register, risk
register, risk report, etc.
 Merge activities that are prone to delays due to one or more
preceding activities being late. 3. Method:
 Noncritical activities to reduce the likelihood that they will create  Data analysis: Technical performance analysis and Reserve
another critical path. analysis
 Activities that require scarce resources to ensure that the  Audits: the effectiveness of the risk management process
resources are available when needed.
 Meetings
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9. CHANGE CONTROL MANAGEMENT 9. CHANGE CONTROL MANAGEMENT

Change Control Process Sample Change Request

Change management systems involve reporting,
controlling, and recording changes to the project baseline
as follows:
1. Identify proposed changes.
2. List expected effects of proposed change(s) on schedule and
budget.
3. Review, evaluate, and approve or disapprove changes formally.
4. Negotiate and resolve conflicts of change, conditions, and cost.
5. Communicate changes to parties affected.
6. Assign responsibility for implementing change.
7. Adjust master schedule and budget.
8. Track all changes that are to be implemented
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9. CHANGE CONTROL MANAGEMENT 10. CHAPTER SUMMARY

Change Request Log

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1. Risk management is proactive not reactive. It reduces the
number of surprises and prepares people for the
unexpected.
2. Contingency plans increase the chance that the project can
be completed on time and within budget. Contingency plans
can be simple “work-arounds” or elaborate detailed plans.
3. Responsibility for risks should be clearly identified and
documented.
4. Use of contingency reserves should be closely monitored,
controlled, and reviewed throughout the project life cycle.
5. Risk management is an iterative process that occurs
throughout the lifespan of the project.
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