The art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives Can have a positive impact on selecting projects, determining the scope of projects, and developing realistic schedules and cost estimates

Help project stakeholders understand the nature of the project, involves team members in defining strengths and weakness, and helps to integrate the other project management knowledge areas Its goal can be viewed as minimizing potential risks while maximizing potential opportunities or payoffs

PROJECT RISK MANAGEMENT Risk management planning y Involves deciding how to approach and plan the risk management activities for the project Involves determining w/c risks are likely to affect a project and documenting the characteristics of each Risk Identification y .

CONT« Qualitative risk analysis y Involves characterizing and analyzing risks and prioritizing their effects on project objectives Involves measuring the probability and consequences of risks and estimating their effects on project objectives Quantitative risk analysis y .

and evaluating the effectiveness of risk reduction throughout the life of the project Risk monitoring and control y . reducing risks.CONT« Risk response planning y Involves taking steps to enhance opportunities and reduce threats to meeting project objectives Involves monitoring known risks. identifying new risks.

RISK MANAGEMENT PLANNING Documents the procedures for managing risk throughout the project Summarizes the results of the risk identification. quantitative analysis. and monitoring and control processes . qualitative analysis. response planning.

RISK MITIGATION Reducing the impact of a risk event by reducing the probability of its occurrence .

RISK MANAGEMENT PLANNING The risk management plan can include the following Methodology for risk management y Roles and responsibilities for activities involved in risk management y Budgets and schedules for the risk management activities y .

CONT« Description of scoring and interpretation methods used for the qualitative and quantitative analyses of risk y Threshold criteria for risks y Reporting formats for risk management activities y Description of how the team will track and document risk activities y .

y . y Fallback plans ² developed for risks that have a high impact on meeting project objectives.RISK MANAGEMENT PLANNING Many Projects also include: Contingency plans ² redefined actions that the project team will take if an identified risk event occurs. and are put into effect if attempts to reduce the risk are not effective.

. if changes in project scope or quality occur.CONT« Contingency reserves or contingency allowances ²provisions held by the project sponsor that can be used to mitigate cost or schedule risk.

. .RISK IDENTIFICATION Below are some tools and techniques for identifying risks: Reviewing project documentation y Analyzing project assumptions y Gathering risk-related information y Project team members and outside experts often hold meetings to discuss some project documents and assumptions after w/c they ask important questions about them as they relate to risk. the project team uses different information-gathering techniques. Then.

It uses repeated rounds of questioning and written responses. while avoiding the biasing effects possible in oral panel deliberations y .RISK IDENTIFICATION Information-gathering techniques include: Brainstorming ² a technique by w/c a group attempts to generate ideas or find a solution for a specific problem by gathering ideas spontaneously and w/out judgment y Delphi technique ² derive a consensus among a panel of experts to make predictions about future developments. including feedback to earlier-round responses to take advantage of group input.

it can also assist in risk identification by having project teams focus on the board perspectives of potentials risks for particular projects.CONT« Interviewing ² a fact-finding technique for collecting information on face-to-face or telephone discussions y SWOT analysis ² often used in strategic planning. y .

.RISK IDENTIFICATION Two other techniques for risk identification Checklists .based on risks that have been encountered in previous projects provide a meaningful template for understanding risk in a current project.

. flow charts. and influence diagrams.CONT« y Diagramming ² include using cause-and-effect diagrams or fishbone diagrams.

. Trigger or risk symptoms ² indicators of actual risk events. ARE THE MAIN OUTPUTS OF RISK IDENTIFICATION PROCESS: Risk Events ² specific things that may occur to the detriment of the project.THE FF.

. the Defense System Management College (DSMC) developed a technique for calculating risk factors ² numbers that represent the overall risk of specific events.QUALITATIVE RISK ANALYSIS Calculating Risk Factor using Probability / Impact matrixes to quantify risk probability and consequence. based on their probability of occurring and the consequences to the project if they do occur.

. optionally.CONT« Top 10 Risk Item Tracking This is a qualitative risk analysis tool. and in addition to identifying risks. it also maintains an awareness of risks throughout the life of a project. with the customer. It involves establishing a periodic review w/ management and.

A common application of decision tree analysis involves calculating expected monetary value. .QUANTITATIVE RISK ANALYSIS Decision Trees and Expected Monetary Value A decision tree is a diagramming method used to help you select the best course of action in situations in w/c future outcomes are uncertain. Expected monetary Value(EMV) is the product of a risk event probability and the event·s monetary value.

you must estimate the probabilities. or chances.CONT« To create a decision tree and to calculate expected monetary value specifically. of certain events occurring. .


. Most simulations are based on some from of Monte Carlo Analysis .simulates a model·s outcome many times to provide a statistical distribution of the calculated results.QUANTITATIVE RISK ANALYSIS Simulation .This uses a representation or model of a system to analyze the expected behavior or performance of the system.

Run a deterministic analysis or one pass through the model using the combination of values selected for each one of the variables. . select a random value based on the probability distribution for the occurrence of the variable. 3.THE FF. ARE THE BASIC STEPS OF A MONTE CARLO SIMULATION: 1. 2. Assess the range for the variables being considered and determine the probability distribution for each For each variable.

Repeat steps 2 and 3 a large number if times to obtain the probability distribution of the results .CONT« 4.

involves eliminating a specific threat or risk. y Risk acceptance ² means accepting the consequences should a risk occur. .RISK RESPONSE PLANNING Below y are the four basic response strategies of risk response planning: Risk avoidance . usually by eliminating its cause.

y Risk mitigation ² involves reducing the impact of a risk event by reducing the probability of its occurrence. y .CONT« Risk transference .shifting the consequences of a risk and responsibility for its management to a third party.

RISK RESPONSE PLANNING Important outputs of the risk response development process include a risk management plan. Important outputs from risk response planning include development of a risk response plan. and analysis of secondary risks. analysis of residual risks. and reserves. . contingency plans.

.CONT« The risk response plan describes identified risks. budget and schedule estimates for response. people assigned responsibilities for managing those risks. response strategies. and contingency and fallback plans. results from risk analysis.

.CONT« Residual risks are risks that remain after all of the response strategies have been implemented Secondary risks are a direct result of implementing a risk response.

implement a planned contingency activity. or eliminate a risk for the list of potential risks when it no longer exists. .RISK MONITORING AND CONTROL Carrying out individual risk management plans involves monitoring risk on the basis of defined milestones and making decisions regarding risks and mitigation strategies. It may be necessary to alter mitigation strategy if it becomes ineffective.

CONT« Project teams sometime use workarounds unplanned responses to risk events ² when they do not have contingency plan in place. .

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