Week 6 – MGMT182 [Introduction to Risk

Management]

Project Scope, Quality

& Risk Management
Content
• What can go wrong during the project?
• Project Risk Management - An Introduction
• Why do we manage Risks?
• The key steps involved in Project Risk Management
• Different Methods to identify Risks
• Brainstorming
• SWOT Analysis
• Checklist Analysis
• Assumption Analysis
• Documentation Review
• Expert Judgement
• Delphi Technique

• Project Risk Impact

• Project Probability
• Risk Assessment
 What Can Go Wrong
During the Project?

The first step is to consider everything that could

possibly go wrong

Risks may be identified through discussions with

various stakeholders, review of the project scope,
and research into previous projects

Each risk identified should be assessed as follows:

• How likely is it that this risk will occur?

• If it does occur, what will be the impact on the project?
Project Risk Management

Project risk management refers to the systematic process of:

• identifying,
• assessing,
• prioritizing, and
• mitigating risks that could potentially impact a project's objectives, deliverables,
timeline, budget, or overall success.
It involves:
• identifying potential risks,
• analyzing their likelihood and impact,
• developing strategies to address them, and
• implementing risk response plans to minimize their potential negative consequences.
 Project problems can be reduced as
much as 90% by using risk analysis

Why Do Positives:

We
• More info available during planning
• Improved probability of success/optimum
project

Manage
• It is called “Opportunity”.

Negatives:

Risk? • Belief that all risks are accounted for

• Project cut due to risk level
• It is called “Threat.”
The key steps in Project Risk Management

STEP DESCRIPTION
• Systematically identify potential risks that may impact the project.
Step 1: Risk Identification • Use techniques such as brainstorming, checklists, and historical data analysis to identify risks.
• Document identified risks and their characteristics.

• Assess the identified risks in terms of their likelihood of occurrence and potential impact on the
project objectives.
Step 2: Risk Assessment
• Prioritize risks based on their significance to the project.
• Perform qualitative and quantitative risk analysis to evaluate and rank risks.
• Develop strategies to address identified risks.
• Determine appropriate risk response actions, such as risk mitigation, risk transfer, risk
Step 3: Risk Response Planning
avoidance, or risk acceptance.
• Create contingency plans and identify triggers for executing risk response actions.
• Continuously monitor identified risks throughout the project's lifecycle.
• Track the status of risks, assess their potential impact, and evaluate the effectiveness of risk
response actions.
Step 4: Risk Monitoring and Control • Regularly review and update the risk management plan as new risks emerge or existing risks
change.
• Communicate and share information about identified risks, their potential impact, and the
strategies in place to address them.
Identifying Risk –
Brainstorming (1/7)
•A group technique that
encourages participants to
generate ideas and potential
risks through open and
spontaneous discussion.
• Stakeholders and project team
members freely share their
thoughts, experiences, and
concerns related to the project,
facilitating the identification of
risks.
Identifying Risk – SWOT Analysis (2/7)
• SWOT stands for Strengths,
Weaknesses, Opportunities, and
Strength Weaknesses
Threats.
• This method involves assessing
the project's internal and external
SWOT
factors to identify potential risks. ANALYSIS
• It examines the project's strengths
and weaknesses as well as
external opportunities and threats Opportunities Threats
that may impact its success.
Identifying Risk -
Checklist Analysis
(3/7)
• A systematic approach using
predefined checklists or
questionnaires to prompt the
identification of potential risks.
• These checklists are based on
past project experiences,
industry-specific knowledge, or
best practices.
• They help ensure a
comprehensive examination of
various risk categories.
Identifying Risk -
Assumption
Analysis (4/7)
• Examining the assumptions
made during project planning
and identifying potential risks
associated with those
assumptions.
• By challenging assumptions,
project teams can uncover risks
that may have been overlooked
or underestimated during the
initial project planning stages.
Identifying Risk -
Documentation
Review (5/7)
• Reviewing project
documentation and OPAs, such
as project plans, requirements
documents, designs, contracts,
and lessons learned from
previous projects.
• This method helps identify risks
by analyzing existing information
and identifying gaps or potential
areas of concern.
Identifying Risk –
Expert Judgement
(6/7)
• Seeking insights and opinions
from subject matter experts,
experienced professionals, or
individuals with specialized
knowledge relevant to the
project.
• Their expertise helps identify
risks that might be unique to
the project, industry, or
specific context.
Identifying Risk –
Delphi Technique
(7/7)
• An iterative method that involves
collecting anonymous input from
a panel of experts and
summarizing their responses.
• The process continues until a
consensus is reached.
• This method encourages
unbiased input and helps
identify risks based on the
collective wisdom of the experts.
Delphi Method

Questionnaires

Experts

Reaching a common
conclusion
(Consensus)
 Different Methods to
identify Risks in
Projects – An Overview
METHODS DESCRIPTION
A group technique that encourages participants to generate ideas and potential risks through open and spontaneous discussion.
Brainstorming Participants freely share their thoughts, experiences, and concerns related to the project, facilitating the identification of risks.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This method involves assessing the project's internal and external
SWOT Analysis factors to identify potential risks. It examines the project's strengths and weaknesses as well as external opportunities and threats that
may impact its success.
A systematic approach using predefined checklists or questionnaires to prompt the identification of potential risks. These checklists are
Checklist Analysis based on past project experiences, industry-specific knowledge, or best practices. They help ensure a comprehensive examination of
various risk categories.
Examining the assumptions made during project planning and identifying potential risks associated with those assumptions. By
Assumption Analysis challenging assumptions, project teams can uncover risks that may have been overlooked or underestimated during the initial project
planning stages.

Reviewing project documentation, such as project plans, requirements documents, designs, contracts, and lessons learned from previous
Documentation Review projects. This method helps identify risks by analyzing existing information and identifying gaps or potential areas of concern.

Seeking insights and opinions from subject matter experts, experienced professionals, or individuals with specialized knowledge relevant to
Expert Judgment the project. Their expertise helps identify risks that might be unique to the project, industry, or specific context.
An iterative method that involves collecting anonymous input from a panel of experts and summarizing their responses. The process
Delphi Technique continues until a consensus is reached. This method encourages unbiased input and helps identify risks based on the collective wisdom of
the experts.
Project Risk Impact

Risk impact refers to the potential consequences or effects that

may occur if a risk event materializes.

It assesses the severity of the risk on:

• project objectives,
• deliverables,
• schedule,
• budget,
• quality, and
• other relevant factors.
Project Risk Probability (or Likelihood)

Risk probability, also known as likelihood or frequency, measures the chance

or probability of a risk event occurring.

It assesses the likelihood of a risk materializing and affecting the project.

Probability is typically assessed on:
• historical data,
• Project complexity
• uncertainties
• expert judgment, and
• analysis of relevant factors.
The probability helps determine the level of attention and resources required
to address and manage the risk.
 The probability and impact
Describing may be described qualitatively:
the • e.g., “High”, “Medium”, “Low”

Probability Or they may be described

quantitatively:
and Impact
• e.g., 10% (probability) and $10,000
(impact)
 Summary - I
Project Risk Management is crucial in identifying and addressing
potential issues that may arise during a project.

Understanding what can go wrong during a project helps in proactively

managing risks. Risk management aims to minimize negative impacts
on project objectives and maximize opportunities for success.

The key steps involved in Project Risk Management include risk

identification, assessment, response planning, and monitoring.
 Summary - II
Different methods can be employed to identify risks, such as brainstorming, SWOT analysis,
checklist analysis, assumption analysis, documentation review, expert judgement, and the
Delphi technique.

Risk impact and probability are assessed to determine the severity and likelihood of risks
occurring.

Risk assessment provides a basis for prioritizing and addressing risks appropriately.

By implementing effective Project Risk Management, organizations can improve project

outcomes, ensure timely delivery, and minimize disruptions caused by unforeseen events.