Course CL2 – Risk Management

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 CL2 Risk Management
Module Objectives

At the end of this module you should be able

to:
 Define a risk
 Explain the stages of risk management
 Explain inputs and outputs for risk
management planning
 Explain how to undertake risk identification

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 CL2 Risk Management
Module Objectives (cont)

 Describe a Risk Logframe or Register

 Explain Qualitative Risk Analysis and how it
is carried out
 Explain Quantitative Risk Analysis and how
it is carried out
 Explain strategies used to respond to risks
 Explain Risk Monitoring and Control

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 CL2 Risk Management
What is Risk?

 Risk is an uncertain event or condition that

may have a positive or negative effect upon
one or more project objectives.

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 CL2 Risk Management
Components of Risk Management

 Planning
 Identification
 Qualitative Analysis
 Quantitative Analysis
 Response Planning
 Monitoring and Control

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 CL2 Risk Management
Risk Management Planning

 Determination of how to manage risk for a

project
 Stakeholders aware and contribute
 Appropriate to level of risk
 Threats and opportunities
 Early in project
 At start of each stage of a project
 Repeated regularly
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 CL2 Risk Management
Risk Management Planning Inputs

 Organisation’s policy towards risk

 Procedural manuals
 Scope of work
 Project management plan

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 CL2 Risk Management
Risk Management Planning Outputs

 Resources required
 Methodology to be followed
 Risk management team
 Risk reporting procedures
 Estimates of resources and budget
 Risk categories
 Probability and impact of risks

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 CL2 Risk Management
Risk Identification

 Process of identifying risks and determining

their characteristics
 Wide range of viewpoints

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 CL2 Risk Management
Risk Identification Inputs

 External and internal

 Scope of work
 Allocation of responsibilities
 Provision for risk management in budget
 Project programme and budget
 QA, H&S, Environmental plans

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 CL2 Risk Management
Risk Identification Process

 Review project documentation

 Brainstorming
 Interviewing
 SWOT analysis
 Checklists
 Assumptions
 Diagrams

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 CL2 Risk Management
Risk Identification Outputs

 Additions to Logframe
 Additional documentation

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 CL2 Risk Management
Qualitative Risk Analysis

 Establishes risk priority

 Objective
 Evaluates probabilities and impacts
 Repeated when necessary

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 CL2 Risk Management
Qualitative Risk Analysis Inputs

 Previous records
 Scope of project
 Project specific risks
 New type of project
 Risk management plan
 Risk logframe

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 CL2 Risk Management
Qualitative Risk Analysis Process

 Risk probability
 Risk impact
 Risk Priority Matrix
 Accurate data
 Risk categories
 Lead time

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 CL2 Risk Management
Qualitative Risk Analysis Outputs

 Risk severity
 Risk priority
 Risk groups
 Urgent action risks
 Watchlist to be monitored
 Risks requiring further assessment
 Possible responses

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 CL2 Risk Management
Quantitative Risk Analysis

 Analyses effects of risks

 Assists decision making
 Quantifies effects on project objectives
 Probability of achieving project objectives
 Priority base on effect on overall project
 Realistic project targets

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 CL2 Risk Management
Quantitative Risk Analysis Inputs

 Previous records
 Scope of project
 Project specific risks
 New type of project
 Risk management plan
 Risk logframe

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 CL2 Risk Management
Quantitative Risk Analysis Process

 Interviews
 Discussions
 3 point estimates
 Reasons for choosing distribution
 Asymmetric distribution
 Monte Carlo simulation

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 CL2 Risk Management
Quantitative Risk Analysis Outputs

 Project programme and cost outcomes

 Cumulative probability chart
 Probability of reaching original objectives
 Identification of threats and opportunities

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 CL2 Risk Management
Risk Response Planning

 Plan actions to reduce threats and enhance

opportunities
 Address risks in order of priority
 Allocate resources and activities
 Risk manager
 Match response to impact of risk
 Authorised response

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 CL2 Risk Management
Risk Response Inputs

 Risk logframe
 Resource constraints
 Time constraints
 Budget constraints

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 CL2 Risk Management
Risk Response Planning Process

 Threats
Risk avoidance
Risk transfer
Risk mitigation

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 CL2 Risk Management
Risk Response Planning Process (cont)

 Opportunities
Risk exploitation
Risk sharing
Risk enhancement
 Risk acceptance
 Contingent response

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 CL2 Risk Management
Risk Response Planning Outputs

 Response strategies
 Actions for implementation
 Budget and programme changes
 Contingency plans and trigger events
 Accepted risks
 Residual risks
 Contingency reserves necessary to meet
required probability of success
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 CL2 Risk Management
Risk Monitoring and Control

 Identify new and changed risks

 Implementation of planned responses
 Track recognised risk events
 Monitor risks on watchlist
 Monitor trigger events
 Record effectiveness of planned responses

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 CL2 Risk Management
Risk Monitoring and Control (cont)

 Flag events that require further assessment

 Validity of assumptions
 Changes in risk
 Revision of contingencies
 Audit of risk management plan
 Record events

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 CL2 Risk Management
Risk Monitoring and Control Inputs

 Risk management plan

 Risk logframe
 Project documents
Variations
Quality control reports
Progress reports
Payment certificates

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 CL2 Risk Management
Risk Monitoring and Control Process

 Recognise new risks

 Reassess known risks
 Audit management procedures
 Analyse variances and trends
 Assess contignency remaining v. that
required

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 CL2 Risk Management
Risk Monitoring and Control Outputs

 Effectiveness of analysis
 Identify new and changed risks
 Dead risks
 Actual outcomes of activities
 Audit report on risk management
 Input to completion report

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End of Risk Management

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