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Risk Analysis And Mitigation Precedence Modeling RatneshwarJha 20 Nov 2010
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Risk Analysis And Mitigation Precedence Modeling Agenda Present Risk Models Proposed Risk Model - Assumption Various Phases of Proposed Model Risk Influence Factor Analysis Risk Discovery Phase Mitigation Prioritization Risk Variance With Time
Benefits Of Proposed Risk Models
Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Benefits Of Proposed Risk Models
Risk Analysis And Mitigation Precedence Modeling
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Present Risk Analysis Model Present model : Prioritized based on risk exposure Risk exposure: Impact & Probability on Project Answer to question “Would we care?” Risk Attributes : Subjective and Non-quantifiable Low Motivation in team, Skills, Performance, Satisfaction Present Risk Model : Fails in case of same Risk Exposure Doesn’t include inter-dependencies between risks Unable to predict risk /mitigation behavior in future Partially answers “Would we care?” analogy Risk Analysis And Mitigation Precedence Modeling
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Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Benefits Of Proposed Risk Models
Risk Analysis And Mitigation Precedence Modeling
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Proposed Risk Model Proposed Model: Scope : Large/Small Eco-system Models on Risk exposure, Mitigation exposure and interdependencies among the risks. Based on above parameter Mitigation priority is assigned. Benefits : Better mitigation prioritization Mitigation approach Predicts risk/mitigation behavior in future Assumptions :
Some risk influence other risk’s strength that is, risk should not be viewed as independent entity while analyzing it
Some risk has certain element of opportunity associated with it which can be cased by the way it is prioritized and mitigated
Risk’s strength is dependent on time field
Risk Analysis And Mitigation Precedence Modeling
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Phases in Risk Model Risk Influence Factor Analysis:
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“The more influential are the RIFs on a risk category, the more is the chances of risk occurrence in that category.”
Risk Analysis And Mitigation Precedence Modeling
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Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Benefits Of Proposed Risk Models
Risk Analysis And Mitigation Precedence Modeling
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“What-If” for a risk category Answer to “Why” Properly identify the risk attributes New Risk Identified. Phase 2: Risk Network Generation Risk discovery: Starts from conceptualization and ends till Go-Live Iteratively and frequently revisited Frequency depends in project health Risk Discovery Variants: What-If and Why scenarios Risk Dependency analysis What –If And Why Scenarios: What –If generates potential fault point in project Why validate the above fault points Risk Analysis And Mitigation Precedence Modeling
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Phase 2: Risk Network Generation Graphical diagram of Risk tree Risk Network Tree Formation The dependent risk forms risk network tree structure with the child risk as root. In a project , suppose following risks are identified: R1: Not having sufficient license for engineering tool R2: Engineering skills is low R3: Schedule commitment looks aggressive. R1 is affecting risk R2 and R3 and R2 is affecting risk R3. R3 R2 R1 Risk Analysis And Mitigation Precedence Modeling
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Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Cost Benefit Factor (C.B.T): Describes relative financial benefit involved in mitigating a risk C.B.T = (1 – (Cost of Mitigation/Amount at Stake)) *10 Time Factor (T.E): Risks which have greater time for mitigation comes low in mitigation priority. T.E = (Expected time for Mitigation/Total Time available Mitigation) *10 Risk Analysis And Mitigation Precedence Modeling
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Phase 3: Risk Mitigation Prioritization Mitigation Exposure: Defines the overall drive to mitigate a given risk. Average of the C.B.T and T.E factors involved. M.E = (C.B.T + T.E)/2 Alone Mitigation Factor (A.M.F): Represents the individual mitigation priority that a risk alone carries. A.M.F (R) = R.E * M.E Risk Analysis And Mitigation Precedence Modeling
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Phase 3: Risk Mitigation Prioritization Total Mitigation Factor (T.M.F): The Alone Mitigation Factor (A.M.F) is calculated without considering risk dependencies. Total Mitigation factor for a risk node takes risk dependencies into picture T.M.F(R) = A.M.F(R)+C (R|PA(R))* T.M.F (PA(R)) On the basis of T.M.F factor of risks, risk are prioritized for mitigation. Dependency Factor: C(R|PA(R)) = P(R | PA(R)) * ( IR/ (IR+IPA(R)) ) v Risk Analysis And Mitigation Precedence Modeling
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Phase 3: Risk Mitigation Prioritization R1 and R2 are the risks and R2 affects R1 by 0.6. The statistics are listed as follows:
R1:
A.M.F = 20 T.M.F = A.M.F (R1) + T.M.F(R2) * C21 = 20 + 20 * 0.6 = 32 Here C21 is Dependency Factor of R2 on R1.
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A.M.F = 20 T.M.F=A.M.F=20 as no risk is connected to R2. Risk Analysis And Mitigation Precedence Modeling
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Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Benefits Of Proposed Risk Models
Risk Analysis And Mitigation Precedence Modeling
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Risk Mitigation Analysis Analyzing R2 mitigation variance Analyzing all risks together Risk Analysis And Mitigation Precedence Modeling
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Contents Present Risk Models Proposed Risk Model Assumptions Phases in Proposed risk model Various Phases of Proposed Model Phase 1: Risk Influence Factor Analysis Phase 2: Risk Network Generation Phase What –if And Why Analysis Risk Dependency Analysis Phase 3: Risk Mitigation Prioritization Risk Exposure Mitigation Exposure Risk Dependency Analysis Phase 4: Risk Mitigation Analysis
Benefits Of Proposed Risk Models
Risk Analysis And Mitigation Precedence Modeling
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Benefits Of Proposed Model Proposed Model Presents a clear picture to prioritize risk when the risk exposures are similar. It has better predictability for risk. Hence the project can be planned in more better way. Provides better mitigation prioritization and hence, offers better mitigation plan. Current Model Fails to prioritize the risk when risk exposures are similar. Does not offer predictability hence planning business or project is a little difficult with this approach. It is not so robust and futuristic as it does not take various parameters in consideration. Risk Analysis And Mitigation Precedence Modeling
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