Project Management Knowledge Area
RISK MANAGEMENT
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Table of Contents
1. Baseline
2. Definitions
3. Risk Management Process
4. Planning Risk Management
5. Risk Rating
6. Perform Quantitative Analysis
7. Risk Response
8. Risk Response Strategies – Threats
9. Risk Response Strategies – Opportunities
10. Follow Through
11. Risk Management Options
12. Deliverables and Tools
13. Sample Risk Register
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Baseline
Why I have selected “Risk Management” as a Process for the assignment?
I am working in an IT industry with both Software and Engineered Systems as projects.
Hence took an approach to work on the process “Risk Management” that will help me to
understand the subject better by doing do a deep-dive into various risks by research,
interviews and also the online published resources..
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Definition
Definition:
A risk is an uncertain condition or event. If it occurs, it will have an impact on project
(negative or positive). We call the negative risks as Threats, whereas the positive risks can
be an Opportunity.
Trigger:
A risk trigger is a situation or an event that is about to happen or has already happened.
These can be defined as warning signs or symptoms.
Issue:
An issue is a risk that has already occurred and is no longer a risk anymore. Instead we can
call the risk has converted to an issue that needs to be mitigated or handled for a successful
solution or closure.
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Risk Management Process
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Plan Risk Management
Guidelines for Risk Rating
IMPACT
1. Risk occurrence will have no insignificant impact on business success
2. Risk occurrence will have low minor impact on business success
3. Risk occurrence will have medium moderate impact on business success
4. Risk occurrence will have high major impact on business success
5. Risk occurrence will have very high catastrophic impact on business success
LIKELIHOOD
1. Rare or highly unlikely likelihood to happen (e.g. < 10%)
2. Unlikely to happen (20%)
3. Moderate Possible probability of risk occurrence (40%) (e.g. +- 50 %)
4. High Likely probability of risk occurrence (60%)
5. Definite Almost certain probability that risk will occur (e.g. > 90 %)
IMPACT
Qualitative
1. Risk
Risk occurrence Analysis:
will have no insignificant impact on business success
•2. Assign Severity:
Risk occurrence will have low minor impact on business success
3. Risk occurrence will have medium moderate impact on business success
4. Severitywill=have
Risk occurrence Impact X Likelihood
high major (Probability)
impact on business success
• Rank Risks based on Severity
5. Risk occurrence will have very high catastrophic impact on business success
LIKELIHOOD
• Determine which risk will need further management
1. Rare or highly unlikely likelihood to happen (e.g. < 10%)
•2. Determine overall
Unlikely to happen (20%) risk rating for the project6
3. Moderate Possible probability of risk occurrence (40%) (e.g. +- 50 %)
Risk Ranking
Risks can be ranked by their severity (risk exposure) scores, and we may decide not to
actively manage low probability, low impact risks.
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Perform Quantitative Analysis
Quantitative Risk Analysis is the process of numerically analysing the effect of identified
individual risks. It can be achieved through numerical analysis techniques such as:
1. Expected Monitory Value
2. Decision Tree Analysis
3. Monte Carlo Simulation
Expected Monitory Value = Probability X Impact
Eg: 20% X INR 4,000.00 = INR 800.00
Decision Tree Analysis
A decision Tree Analysis is a calculation approach for analysing the impacts options in the
presence of uncertainty.
Monte Carlo Simulation
It uses random value between input ranges and re-runs a set of calculations to model the
multiple possible outcome options.
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Risk Response
It is a process of developing options and selecting strategies, and agreeing on actions to take
It is about what to do about the risks that we have identified.
The developed risk responses should be added to the product backlog.
All risks are not negative and also all risks are not positive. The negative risks are threats to
the project and a response strategy shall be prepared.
Similarly, the positive risks are good for the project, wherein the Project Office can find new
opportunities.
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Threat Response Strategies
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Risk Opportunities Response Strategies
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Follow Through
Implement Risk Response
Implement the risk response strategies within the ambit of agreed response plans. It is
actioned by generating change requests and upon approval gets added/updated to the Work
Break Down Structure.
Monitor Risks
Monitor the agreed upon response plan. Track the identified risks, and analyse new risks
that may crop up due to implementation of response plan. Update the Change Request
Register, risk logs, and the lessons learned that will help towards project closure.
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Risk Management Options – Assess and Prioritize
Risk Management is always an Iterative Process even with traditional predictive projects or
the modern Agile projects.
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Risk Management Options – Assess and Prioritise - Agile
Within Agile life cycle projects, these activities repeat with every iteration.
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Deliverables and Tools
1. Risk Management Plan
2. Risk Register
3. Risk-Adjusted Backlog
4. Implement Risk Response Plan
5. Organisational Process Assets
6. Meetings
7. Workshops
8. Expert Judgement
9. Risk Analysis Techniques
10. Risk probability and Impact Assessment
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Thank you
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