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(17 Risk Management)

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Transcript

  • 1. Project Management Risk Management
  • 2. Outline
    • Introduction
    • Definition of Risk
    • Tolerance of Risk
    • Definition of Risk Management
    • Certainty, Risk, and Uncertainty
    • Risk Management Process
    • Risk Planning
    • Risk Assessment
    • Risk Identification
  • 3. Outline
    • Risk Analysis
    • The Monte Carlo Process
    • Risk Handling
    • Selecting the Appropriate Response Mechanism
    • Risk Monitoring
    • Some Implementation Considerations
    • The Use of Lessons Learned
    • Dependencies between Risks
    • The Impact of Risk Handling Measures
    • Risk and Concurrent Engineering
  • 4. Basic Concept
    • Risk management focuses on :
      • Known unknowns
      • Proactive management
  • 5. The alternative to proactive management is reactive management , also called crisis management. This requires significantly more resources and takes longer for problems to surface. Basic Concept
  • 6. Risk Management
    • Risk management focuses on the future
    • Risk and information are inversely related
  • 7. Risk Management (CONT.)
    • Historically, we focused our attentions on schedule and cost risk management.
    • Today, our primary emphasis is on technological risk management:
      • Can we design it and build it?
      • What is the risk of obsolescence?
  • 8. Definition Of Risk(1/2) Risk = f ( Likelihood, Impact )
    • Likelihood is the probability of occurrence
    • Impact is the amount at stake
    event
  • 9. Definition of Risk(2/2) Risk = f (Hazard, Safeguard )
  • 10. Risk is a Function of its Components
  • 11. Tolerance For Risk
    • Risk avoider
    • Risk neutral
    • Risk lover
  • 12. Risk Types
  • 13. Definition of Risk Management
    • Risk management is the act or practice of dealing with risk.
    • It includes:
    • planning for risk,
    • assessing risk issues,
    • developing risk handling strategies, and
    • monitoring risk to determine how they have changed.
  • 14. Decision-Making Categories
    • Complete uncertainty
    • Relative uncertainty (partial information)
    • Complete certainty
  • 15. Developing and Using Payoff Tables Maximin Approach Maximax Approach Minimax regret Approach Insufficient Reason Approach Establishing the procedure to follow Construct the Payoff table Decision-making under certainty Decision-making under complete uncertainty Decision-making under risk Expected Monetary Value (EMV) Approach Expected Opportunity Loss (EOL) Approach Expected Value of Perfect Information (EVPI) Approach
  • 16. Five Steps To Develop Payoff Table
    • List all the alternatives.
    • List the future consequences of each alternative.
    • Identify the payoffs associated with each combination.
    • Assess the degree of certainty that these combinations will materialize
    • Decide on a decision criterion.
  • 17. Decision-Making under Certainty (1/2)
    • A company wish to invest $50 M to develop a new product
    • Three possible demand:
      • Strong, Even, and Low
    • Three ways or not to develop product
      • A, B, and C
  • 18. Decision-Making under Certainty (2/2) Note: 1. Profit in Million 2. S 3 is the best regarding how market is
  • 19. Decision-Making under Risk (1/2)
    • A company wish to invest $50 M to develop a new product
    • Three possible demand:
      • Strong, Even, and Low
    • Three ways or not to develop product
      • A, B, and C
    • Probabilities are assigned to each possible state of nature
  • 20. Decision-Making under Risk (2/2) Note: 1. E 1 =56, E 2 =52, and E 3 =66 2. S 3 is the best choice
  • 21. Decision-Making under Uncertainty (1/9)
    • Uncertainty:
      • Meaningful assignment of probabilities are not possible
    • No single dominant strategy
    • Maximax (Hurwicz)
    • Maximin (Wald)
    • Minimax (Savage)
    • Laplace
    • Decision Tree
  • 22. Decision-Making under Uncertainty (2/9)
    • Maximax (Hurwicz)
      • Optimistic
      • Choose the strategy with maximum profit
      • Suitable for large company
      • Choose S 3 because maximum profit (100M) is S 3
  • 23. Decision-Making under Uncertainty (3/9)
    • Maximin (Wald)
      • Concerns how much he can afford to lose
      • Pessimistic
      • Suitable for small company
      • Choose S 2 because maximize the minimum payoff (50M) from 40, 50, -50
  • 24. Decision-Making under Uncertainty (4/9)
    • Minimax (Savage)
      • Sore loser
      • Minimize maximum regret
      • Subtract all elements in each column from the largest element
      • Maximum regret is the largest regret for each strategy
      • Minimize the maximum regret
      • Choose S 2 or S 2 because minimize the maximum regret from 50, 50, 140
  • 25. Decision-Making under Uncertainty (5/9)
  • 26. Decision-Making under Uncertainty (6/9)
    • Laplace
      • Transform the decision making under uncertainty into decision making under risk
      • Make priori assumption based on Bayesian statistics
      • Assuming the probability for each strategy is 1/3
      • Choose S 1 because maximize the expected value from 60, 53.3, 43.3
  • 27. Decision-Making under Uncertainty (7/9) 1/3 1/3 1/3
  • 28. Decision-Making under Uncertainty (8/9)
    • Decision Tree
  • 29. Decision-Making under Uncertainty (9/9)
    • Decision Tree Example
    Direction of computation
  • 30. Risk Management Processes
    • Risk planning
    • Risk assessment
      • Risk identification
      • Risk analysis/quantification
    • Risk handling
    • Risk monitoring
  • 31. Risk Planning Poor Risk Management Technical Inability Customer Expectations Actual Performance Performance Time
  • 32. Risk Assessment
    • The problem definition stage of risk management
    • Identify and analyze program issues in terms of probability and consequences
  • 33. Life Cycle Risk Analysis
  • 34. Types Of Risks (General)
    • Business risks
    • Insurable (pure) risk
      • Direct property damage
      • Indirect consequential loss
      • Legal liability
      • Personnel
  • 35. Types Of Risk (PMI Method)
    • External – unpredictable
    • External – predictable
    • Internal – non-technical
    • Internal – technical
    • Legal
  • 36. Risk Types at Boeing
    • Financial risks
    • Market risks
    • Technical risks
    • Production risks
  • 37. Risk Quantification STAGE I STAGE II GUID- ANCE WARHEAD COST MANU. TEST DESIGN HIGH MEDIUM LOW LEGEND PROGRAM SUMMARY
  • 38. Risk Handling
    • Assumption (retention)
    • Avoidance
    • Control (mitigation)
    • Transfer
  • 39. Future Risks Customer’s Knowledge Experienced Inexperienced Simple Complex Contract Type INCREASING RISKS
  • 40. How Much Risk Is Acceptable?
    • High tolerance for risk
    • Medium tolerance for risk
    • Low tolerance for risk
  • 41. Degrees of Downstream Risk R&D Manufacturing Marketing Time Low Risk
  • 42. Degrees of Downstream Risk R&D Manufacturing Marketing Information Exchange Time Moderate Risk
  • 43. Degrees of Downstream Risk R&D Manufacturing Marketing Time High Risk
  • 44. The Risk-Reward Matrix Low High Reward Medium Risk High Low Medium Quality of Resources Needed Low Medium High
  • 45. Which Method to Use? Project Procedural Documentation Guidelines High Low Tolerance for Risk Rigid Policies/ Procedures Assumption Reduction Transfer Avoidance
  • 46. Prioritization of Risks Schedule Cost Technical Performance or Quality First (Highest ) Priority Second Priority Third Priority
  • 47. Risk Interdependencies
  • 48. Interacting Risks Specification Limit On Characteristic B Product Feature A Product Feature B Desirable Undesirable Undesirable Desirable
  • 49. Risk Categories at Boeing
  • 50. Tolerance for Risk
  • 51. Risk Control Measures Intensity of Controls Risk Intensity Standard Controls High Low Low Extreme Range of Controls
  • 52. Investment in Risk Management
  • 53. Risk Controls Schedule Length Risk Controls Appropriate Too Long Low High Too Many Risk Management Filters and Gates No Risk Plan