IM (Risk Management)

IM
Risk Management
1) Risk Management Process
2) Risk Analysis and Risk Response
3) Risk Control
Dr. Atar Mon, Associate Professor, UTYCC, 2020 Faculty of Electronic Engineering
Risk Management IM
KEYWORD
Risk Management, Risk Control
Objectives
To identify potential problems before they occur and have a plan for addressing them
To minimize the level of its risk by adding control measures
To achieve created a safer and healthier workplace
Risk Management IM
Risk Management
 A procedure to minimize the adverse effect of a possible financial loss
 Indentifying potential sources of loss
 Measuring the financial consequences of a loss occurring
 Using controls to minimize actual losses or their financial consequences
Risk Management IM
 The purpose of monitoring all project risks is to increase the value of each single
activity within the project
 If the project team is aware of the importance of the risk management process, the
probability of success will be increased while at the same time failure will become
unlucky
Risk Management IM
Risk Management Process
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Risk Management IM
Risk Identification
INPUT TOOLS &

OUTPUT
TECHNIQUES
 Internal/ External  Document  Risk Report/

Factors Reviews Register
 Information  Information
from Prior Gathering
Projects Techniques
 Project
Management
Plan
Risk Management IM
Risk Identification Input
 External factors could be described as attributes of the environment
 Internal factors are attributes of the (project) organization itself
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Typical Examples for External Factors
 Economic conditions
 Social, Legal or regulatory trends
 Political climate
 Competition-international or domestic
 Fluctuation in demand
 Criminal or terroristic activities
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Internal Factors
 Internal culture
 Staff capabilities numbers
 Capacity
 Systems and technology
 Procedure and processes
 Communication effectiveness
 Leadership effectiveness
 Risk appetite
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Risk Assessments and the Risk Management Plan
 Risks are external factors to the project
 Pose as opportunity or threat factors
 If the project is to succeed, the identified external factors must be

covered in the assumption
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In the Community Health Project, the assumptions covered include:
Healthcare services do not decline

 This implies that the health care services status stays as is throughout the project; if it
declines, the project result will be jeopardized.
Diarrhoeal disease is due to unsafe water and hygiene practices

 The 1111 disease does not cover other sources of disease as diagnosis shows that unsafe
water is the only cause of the disease in the area;
 If there will be other causes of diarrhoea, it will have to be known in the analysis.
Risk Management IM
Adequate quantity of water available

 The source of water still produces sufficient quantity for the community
People are not excluded from accessing improved sources

 The farming company or the government will not bar people accessing water
from identified sources
Access not for potentially polluting uses

 The usage of water is intended for safe drinking purposes and there are no
cases that will contribute to pollution of the water sources
Risk Management IM
In Planning the Project
 To help one anticipate these factors that will influence the project positively and
negatively
 A risk assessment as early as the initiation phase can already be undertaken
 Continuously validated and observed during the planning and implementation process
Risk Management IM
In Planning the Project
 Schedules must be realistic, taking into consideration external and internal conditions
and factors of the project environment
 Political, social, economic and cultural aspects of the environment will definitely have an
impact on the project
 The internal organization where the project originates will also affect and influence the
project’s development and implementation
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Example of a Key Risk factor and mitigation strategies
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The Table Describes:
• The risk factor
• The result of this factor to time delays
• The impact of the risk factor on the project, whether it is high, medium or low
• The specific events that relate to the general description of the risk factor
• The possible mitigation strategies that the project team can do to remedy the situation
Risk Management IM
Types of Project Risk Factors
Type of Risk Describe the Impact or Characteristic

Project schedule Increased project time
Budgets/funding Increased cost
Personnel issues Loss of key team member, not enough team members
assigned to project
Quality Doesn’t meet standards
Key Stakeholder Conflicts and project delays
consensus
Scope changes Increased project time and costs
Project plans Increased project time and costs, impact on quality, poor
direction and communication
Risk Management IM
Types of Project Risk Factors

Type of Risk Describe the Impact or Characteristic
Project management methodology Increased project time and costs
Business risk Poor public image
Environmental risk Increased costs, delays to schedule, poor public image
Weather or natural disasters Schedule delays, delivery delays, increased costs
Technology risks Not available when needed
Project complexity Inexperience of project team
Project manager skills Inexperience of project manager
Team skill and abilities Inexperience of team members, lack of training
Risk Management IM
 Risk assessment helps the project team analyze the intensity of the risk factors
 One of the assessment tools that helps identify the risks probability and impact
 The use of the probability and impact matrix to calculate the risk factors
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Probability and Impact Matrix to Assess Risk Factor
 Risks in the high probability and high

impact box are the most alarming
 Would likely affect the project even if
mitigation measures are in place
 If in the planning phase the information is
already able to show that the project is a
high-risk endeavor
 Should either proceed cautiously and focus
on reducing risks, or do not proceed with
the project
Risk Management IM
Project Management Plan
 A Formal
 Approved document which serves the project management as a guideline in project

execution and control
 Include planning, assumption and decisions, sets the communication ways among
stakeholders and records the approved scope, cost and schedule baselines
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 The risk identification step requires that every relevant stakeholder has a complete
understanding of the project
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The Tools & Techniques
 Start with the documentation review to analyse information that already exists in a written form.
 Project charter
 Project scope
 Work breakdown structure (WBS)
 Project schedule
 Cost estimates
 Resource plan
 Assumption list
 Constraints list
Risk Management IM
Risk Analysis and Risk Response
Risk Analysis
 To detect possible interrelationships and enable the project manager to identify a kind of
importance order, also called prioritizing
 To identify the consequences for the project itself and the organizational goals
 Scenario analysis
 The probability of the event
 The impact this would have on the project
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Risk Analysis Methods

Expected
Value
Risk
analysis Decision
Simulation
Methods Trees
Payoff
Tables
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Risk Management IM
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EMV(Stocks)
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Risk Response
Mitigate
Retain
Risk Avoid
Response
Sharing Transfer
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To Mitigate the Risk
 Two terms especially from engineering projects are testing and prototyping
 By testing and prototyping one can test the project in a smaller format with less risk and
detect possible failures and problems
 The team can prepare for these problems or even eliminate them before starting the real
project work
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To Mitigate the Risk
 Cost and time cannot be easily mitigated, because money is used up and the days are
numbered.
 But risk management has a solution for this : budget reserves and time buffers has
safety ratios
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Mitigation measures must be in place for all the risk factors
 A list of risk factors and the response measures must be regularly tracked and
updated
 A template for risk response tracking will help document the dates, actions taken
when risks are mitigated, or when risks event occurred
Risk Management IM
Avoiding Risk
 More drastic approach as the whole project plan might be changed to avoid the
particular risk
 Using well known technology instead of new, experimental technology
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Risk Transfer
 The risk is just moved but not eliminated or damped
 Common approach is outsourcing which is done far in excess in some industries
 The contractor has to take their risk
 As the contractor also has to include the risk possibility in his pricing
 It could be challenging to ensure the subcontractor is able to deal with the risk
Risk Management IM
Sharing Risk
 The different parties share the risks of the same project

 One possible way to save money
 Use in the field of logistics
 Combining the ideas of subs tractor with the project team parent's organization idea a big
improvement could be made
 But to reach a level of teamwork where these procedures work, both sides should gain
advantages from this relationship
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Retaining Risk
 Retaining and accepting the risk can be easiest way to handle

 The impact of the risk is very low and it is easier to buffer it with financial help
and just keep on working
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Risk Control
Risk Control
 Executing the risk response strategy, monitoring and triggering events, initiating
contingency plans and continuously watching for new risks.
 During the project, there might be changes in scope, budget, and schedule which the
project manager has to deal with them
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Risk Control
A Risk Monitoring System

 provides a systematic review of the project risks
 It schedules the risks in the project to
 Ensure that all the necessary elements in the risk management plan are being
implemented
 Ensure that the risks are identified in the list of risk factors
 Assess the effectiveness of the mitigating actions
Risk Management IM
Risk Control
A Risk Monitoring System

 Identify status of actions taken
 Identify status of actions to be taken
 Validate previous risk assessment
 Validate previous assumptions
 State new assumptions
 Identify new risks
 Track risk response
 Establish the system of communicating the status and results of the mitigation
measures
Risk Management IM
Risk Control
A Risk Control Plan is also helpful to
 Validate mitigation strategies and alternatives

 Take corrective action when actual events occur
 Assess impact on the project in terms of cost, time and resources
 Identify new risks resulting from risk mitigation action
 Ensure the project plan and risk management plan are maintained
 Ensure that change control addresses risks associated with the proposed change
 Revise risk assessment and other documents to capture results of the mitigation actions
 Revise the list of risk factors
 Establish communication and updates about the risk factors
Risk Management IM
Risk Control
 The duty of the project manager is to monitor all possible risks in just the same
way as he/she is interested in the project progress
 Risk assessment and updating should be part in every status meeting and
progress report system
 Project team should have the constant awareness that unpredictable risks may
occur
 Team members are not always willing to find out new risks and problems
Risk Management IM
Risk Control
Risk Control
 The duty of the project manager to create an environment in which all team members
feel free to raise concerns and admit mistakes
 Hiding risks or denying problems is not good for the future success of the company
 Every body should be encouraged to identify new risks and therefore the project
manager has to have a positive attitude toward risk.
Risk Management IM
Risk Control
 In very complex and huge projects the risk identification and assessment step has
to be repeated on a regular basis.
 Outside stakeholders and experts should be brought into the discussion so that
they can review the actual risk profiles of the project
Risk Management IM
Risk Control
Never Forget: Risk Management is an ongoing process and many project

manager learn their lesson the hard way
Remember: Risk Never Sleeps!
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IM (Risk Management)

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IM

1) Risk Management Process

2) Risk Analysis and Risk Response

Risk Management, Risk Control

To minimize the level of its risk by adding control measures

To achieve created a safer and healthier workplace

 A procedure to minimize the adverse effect of a possible financial loss

 Indentifying potential sources of loss

 Measuring the financial consequences of a loss occurring

 Using controls to minimize actual losses or their financial consequences

Risk Management Process

Risk Management Process

INPUT TOOLS &

 Internal/ External  Document  Risk Report/

Risk Management Process

Risk Identification Input

 External factors could be described as attributes of the environment

 Internal factors are attributes of the (project) organization itself

Risk Management Process

Typical Examples for External Factors

Risk Management Process

Risk Management Process

Risk Assessments and the Risk Management Plan

 Risks are external factors to the project

 Pose as opportunity or threat factors

 If the project is to succeed, the identified external factors must be

Risk Management Process

In the Community Health Project, the assumptions covered include:

Healthcare services do not decline

Diarrhoeal disease is due to unsafe water and hygiene practices

Risk Management Process

Adequate quantity of water available

People are not excluded from accessing improved sources

Access not for potentially polluting uses

Risk Management Process

In Planning the Project

 A risk assessment as early as the initiation phase can already be undertaken

Risk Management Process

In Planning the Project

Risk Management Process

Example of a Key Risk factor and mitigation strategies

Risk Management Process

The Table Describes:

• The risk factor

• The result of this factor to time delays

Risk Management Process

Types of Project Risk Factors

Type of Risk Describe the Impact or Characteristic

Risk Management Process

Types of Project Risk Factors

Project management methodology Increased project time and costs

Business risk Poor public image

Environmental risk Increased costs, delays to schedule, poor public image

Weather or natural disasters Schedule delays, delivery delays, increased costs

Technology risks Not available when needed

Project complexity Inexperience of project team

Project manager skills Inexperience of project manager

Team skill and abilities Inexperience of team members, lack of training

Risk Management Process

Risk Management Process

Probability and Impact Matrix to Assess Risk Factor

 Risks in the high probability and high

Risk Management Process