CHAPTER 4

PROJECT RISK MANAGEMENT

 LEARNING OUTCOME
At the end of this lesson, students should be able
to:
ODiscuss the concept of project risk
management (CO1, PO2)
ODescribe the project risk management
processes (CO1, PO2)
OIdentify the roles of project managers in
project risk management (CO1, PO2)
Project risk management
Definition
O Includes the processes concerned with
conducting risk management planning,
identification, analysis, responses, and
monitoring and control of a project.
O The purpose of project risk management is to
increase the probability and impact of positive
events, and decrease the probability and
impact of events adverse to project objectives.
 Project Risk Management
Processes
O Risk management planning: deciding how to
approach and plan the risk management activities
for the project

O Risk identification: determining which risks are

likely to affect a project and documenting the
characteristics of each

O Qualitative risk analysis: prioritizing risks based

on their probability and impact of occurrence
 Project Risk Management
Processes
O Quantitative risk analysis: numerically estimating the
effects of risks on project objectives

O Risk response planning: taking steps to enhance

opportunities and reduce threats to meeting project
objectives

O Risk monitoring and control: monitoring identified

and residual risks, identifying new risks, carrying out
risk response plans, and evaluating the effectiveness of
risk strategies throughout the life of the project
 Purpose of Project Risk
Management Processes
O As the project are being planned and executed, the
circumstances will change
O As time goes on, usually there is an increase in the
amount of information available about risks
O Some risk will occur in certain part of the project, while
others will not
O During an execution of the project, new risks will arise
or be discovered
O The characteristics of identified risks may change
Steps to maintain effectiveness of
project risk management process
O The identification and analysis of risks should
be revisited occasionally
O The progress on risk response actions should
be observed
O The action plans adjusted accordingly
O Revisit the risk management planning process
Project Manager’s Role for Project
Risk Management
O Encouraging senior management support for
project risk management activities
O Applying projects contingency funds to deal
with identified risks that occur during the
project
O Determining the acceptable levels of risk for
the project in consultation with stakeholders
O Overseeing risk management by subcontractors
and suppliers
Project Manager’s Role for Project
Risk Management
O Developing and approving the risk
management plan
O Regularly reporting risk status to key
stakeholders, with recommendations for
appropriate strategic decisions and actions
O Promoting the project risk management
process for the project
O Auditing risk responses for their effectiveness
and documenting lessons learned
Project Manager’s Role for Project
Risk Management
O Facilitating open and honest communication
about risk within the project team and with
management and other stakeholders
O Monitoring the efficiency and effectiveness of
the project risk management process
O Participating in all aspects of the project risk
management process
O Approving risk responses and associated
actions prior to implementation
Project Risk Management
Summary
The end for today