PROJECT RISK

MANAGEMENT
PRESENTER: SAYIDALI ADED MUHUMED
INTRODUCTION

• Risk is defined as the possibility of a loss.

• The term risk is associated with connotation of negativity and
uncertainty.
• Its uncertain events which if they occur will have unexpected
(usually Negative) effect on the project’s objective.
• Risks are taken because associated with the risks are
opportunities and organizations accept only those risks which
are balanced with the reward that may be gained by accepting
the risks.
INTRODUCTION

• Different organizations will have different level of risk tolerance,

some may be risk averse and some may be risk prone.
• Of course you have and in between category of people being
risk neutral.
• Risk conditions are those aspects of project environment that
could contribute to the risks.
• Risk management is an activity undertaken to reduce the
impact of potentially adverse event.
SUB PROCESSES IN RISK MANAGEMENT

• Risk management planning

• Risk identification
• Risk analyze
• Risk response planning
• Risk monitoring and control
RISK MANAGEMENT PLANNING PROCESS

• Risk management planning is aimed at deciding on

“How to approach and plan” the risk management
activities of the project.
• This process does not address the response to
individual risks.
• Responses to individual risks are addressed by the
risk response planning process.
RISK MANAGEMENT PLANNING PROCESS

• Outputs of Risk management planning process:

• Methodology: Approaches, tools, techniques, data
sources etc
• Budgeting: budget for project risk management
• Roles & responsibilities: lead support, risk management
team,
• Timing: when risk management plan will run, how
frequently it will run.
RISK MANAGEMENT PLANNING PROCESS

• Scoring and interpretation: assessment & evaluation

• Threshold: risk level at which action will be taken by
whom and what manner.
• Reporting: information about risk management is
reported
• Tracking: recording of all project activities for the benefit
of the current and future projects.
• Contingency plan: specifies the predefined action that will
be put into action if the risk materialize.
RISK MANAGEMENT PLANNING PROCESS

• Mitigation activities are put into out project plan

immediately with immediate tracking whereas contingency
plan is put into effect only if the risk were to materialize
• Contingency reserves are the funds or resources which are
kept available for coping with unexpected changes that
may happen to scope, cost, schedule and content.
RISK IDENTIFICATION PROCESS

• Risk identification process involves:

• Identifying risks that may effect the project
• Market risks
• Financial risks
• Technology risks
• Or by knowledge areas
RISK IDENTIFICATION PROCESS

• Documenting characteristics of risks.

• * Risk identification checklists( based on the past experience) provide
a valuable tools for risk identification
• Risk events are specific things that may occur to the betterment of
the project e.g. significant changes to the scope of the project,
performance failure on the produced part etc.
• When risk events are identified it is important to define what is their
likely probability of occurrence and consequence.
RISK ANALYSIS PROCESS

• Risk analysis is used in all risk related decisions and answering

questions like if the risk worth reducing, if the proposed solution is
economically viable, is the case multi-risks solution there and so on.
• The objective of risk analysis process is to help highest
management to strike economic balance between the impact of the
risk and the cost of productive measures.
• Risk analysis involves evaluating the risk and assessing the risk
tolerance, risk interaction, so that the likely project outcomes can
be detected.
RISK RESPONSE PLANNING

• Risk response planning includes identification and

assignment of responsibility to individuals or to groups of
people for each particular response.
• Planning alone does not do anything like identifying and
deciding what to do, don’t by itself get implemented so the
responsibility has to be specifically assigned to some body.
• Effective risk management planning is something that
directly determines whether the risk will increase or
decrease during the project’s particular life.
RISK RESPONSE PLANNING

• Typical risk response strategies are:

• Avoidance: eliminating the risk usually by eliminating its cause, or to protect
the project from its impact. Like not using specific technology.
• Transferance: transferring the risk to minimize its impact and shifting the
consequence to third party. This transfers the responsibility for the risk not the
risk itself.
• Mitigation: reducing the probability of risk and reducing the consequential loss.
• Acceptance: Risk Acceptance is a risk response strategy whereby we, as the
project team, decide to acknowledge the risk and not take any action unless the
risk occurs
RISK MONITORING AND CONTROLLING
PROCESS
• It is an ongoing process which operates throughout the life of
the project.
• Risk response owners periodically report to the project
managers about:
• Effectiveness of the risks response plan
• any unanticipated effects
• Desired midcourse correction to risk plan
• Good risk monitoring and control process should provide
information that will assist and taking preemptive actions to
face risks.
THANKS FOR YOUR ATTENTION

COMMENTS AND QUESTIONS