LECTURE 3  RISK MANAGEMENT   MOSTAFA EWEES EMAIL:DRMUS2000@YAHOO.COM  Project Management
Agenda <ul><li>Project  </li></ul><ul><li>Risk </li></ul><ul><li>Project Risk Management  </li></ul><ul><li>The Risk Manag...
Project  <ul><li>A project is a temporary organisation, separate from, but strongly dependent of the organisation, (the or...
Project  A PROJECT is an organisational form with a defined objective limited in resources and time. Objectives Time Resou...
Risk  <ul><li>The chance that something happens that will have an impact on objectives. It is measured in consequence and ...
Risk Management  <ul><li>Risk Management: refers to the way in which risks faced by the business are dealt with. Risks may...
Project Risk Management  <ul><li>Risk Management assists project managers in setting priorities, allocating resources and ...
The Project Risk Management Approach  <ul><li>We must ensure that:  </li></ul><ul><ul><li>All significant risks are identi...
The Risk Management Process
Establish the context <ul><li>The context is a framework in which all activities of a project takes place.  </li></ul><ul>...
Risk Identification  <ul><li>The process of determining:  </li></ul><ul><ul><li>What could happen? </li></ul></ul><ul><ul>...
Risk Identification <ul><li>Methods: </li></ul><ul><ul><li>Brainstorming  </li></ul></ul><ul><ul><li>Examination of previo...
Risk Assessment  <ul><li>Risk assessment is the overall process of risk analysis and risk evaluation. Its purpose is to de...
Risk Analysis  <ul><li>The systematic use of available information to determine how often specific events may occur and th...
Risk Analysis <ul><li>Likelihood  </li></ul><ul><ul><li>How likely is the loss to occur? </li></ul></ul><ul><ul><li>What i...
Risk Evaluation Likelihood Consequence High Low Low High Medium risk High risk  Low risk Medium risk
Risk Treatment  <ul><li>Identify the options for reducing the likelihood or consequence for each risk </li></ul><ul><li>De...
Risk Treatment  <ul><li>Risk avoidance  </li></ul><ul><ul><li>Possible?  </li></ul></ul><ul><li>Loss control options  </li...
Monitoring and review <ul><li>Continuous monitoring and review of risks ensures new risks are detected and managed, and th...
Communication and reporting  <ul><li>Senior managers need to understand the risks they face, and risk reports provide a co...
Summary  <ul><li>How do we define a project?  </li></ul><ul><li>What is a risk? </li></ul><ul><li>How can we analyse and t...
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Project Management by Mostafa Ewees

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Project Management by Mostafa Ewees

  1. 1. LECTURE 3 RISK MANAGEMENT MOSTAFA EWEES EMAIL:DRMUS2000@YAHOO.COM Project Management
  2. 2. Agenda <ul><li>Project </li></ul><ul><li>Risk </li></ul><ul><li>Project Risk Management </li></ul><ul><li>The Risk Management Process </li></ul><ul><li>Purpose: get an understanding of basic project risk management </li></ul>
  3. 3. Project <ul><li>A project is a temporary organisation, separate from, but strongly dependent of the organisation, (the ordinary organisation). A project has a fixed, well defined and controllable objective. A project has its own resources (time, money, personal etc). </li></ul><ul><li>All projects have three interrelated objectives: to 1 meet the budget, 2 finish on time, 3 meet specifications that satisfy the client. </li></ul>
  4. 4. Project A PROJECT is an organisational form with a defined objective limited in resources and time. Objectives Time Resources
  5. 5. Risk <ul><li>The chance that something happens that will have an impact on objectives. It is measured in consequence and likelihood. The consequences may be positive or negative </li></ul><ul><li>There is no human activity which does not have risks . </li></ul>
  6. 6. Risk Management <ul><li>Risk Management: refers to the way in which risks faced by the business are dealt with. Risks may arise from the nature of the business operations and/or the way in which the business is financed. </li></ul><ul><li>The purpose of (Project) Risk Management is to minimize the risk of not achieving the objectives of the project. </li></ul>
  7. 7. Project Risk Management <ul><li>Risk Management assists project managers in setting priorities, allocating resources and implementing actions and processes that reduce the risk of the project not achieving its objectives. </li></ul><ul><li>Risk Management facilitates better decision making and better project outcomes. </li></ul>
  8. 8. The Project Risk Management Approach <ul><li>We must ensure that: </li></ul><ul><ul><li>All significant risks are identified </li></ul></ul><ul><ul><li>Identified risks are understood (likelihood and consequences) </li></ul></ul><ul><ul><li>Assessment is undertaken of individual risks relative to other risks </li></ul></ul><ul><ul><li>Strategies for treating risks are established </li></ul></ul><ul><ul><li>The process itself and the risk treatment strategies are implemented cost-effectively </li></ul></ul>
  9. 9. The Risk Management Process
  10. 10. Establish the context <ul><li>The context is a framework in which all activities of a project takes place. </li></ul><ul><ul><li>Strategic Context </li></ul></ul><ul><ul><ul><li>Relationship between the organisation(s) and their environment. </li></ul></ul></ul><ul><ul><li>Organisational Context </li></ul></ul><ul><ul><ul><li>What is the organisation all about? </li></ul></ul></ul><ul><ul><li>Risk Management Context </li></ul></ul><ul><ul><ul><li>This level focus on the project which the Risk Management Process is being applied. Do we understand the project (goals, time frame etc.)? </li></ul></ul></ul><ul><li>Summary: Do we clearly understand what should be the role of risk management in the project? </li></ul>
  11. 11. Risk Identification <ul><li>The process of determining: </li></ul><ul><ul><li>What could happen? </li></ul></ul><ul><ul><li>How could it happen? </li></ul></ul><ul><ul><li>Why can it happen? </li></ul></ul><ul><li>A risk which is not identified can not be treated </li></ul>
  12. 12. Risk Identification <ul><li>Methods: </li></ul><ul><ul><li>Brainstorming </li></ul></ul><ul><ul><li>Examination of previous similar projects </li></ul></ul><ul><ul><li>Standard Questioners and Surveys (sources: insurance companies) </li></ul></ul><ul><ul><li>Scenario analysis </li></ul></ul><ul><ul><li>Work Breakdown Structure analysis </li></ul></ul>
  13. 13. Risk Assessment <ul><li>Risk assessment is the overall process of risk analysis and risk evaluation. Its purpose is to develop agreed priorities from identified risks. </li></ul>
  14. 14. Risk Analysis <ul><li>The systematic use of available information to determine how often specific events may occur and the magnitude of their likely consequences. </li></ul><ul><li>Determine likelihood and consequence </li></ul><ul><ul><li>Two types of methods: </li></ul></ul><ul><ul><ul><li>Qualitative: expresses in word form or in descriptive scales the likelihood and consequences of an event </li></ul></ul></ul><ul><ul><ul><li>Quantitative: using numerical values to determine likelihood and consequences </li></ul></ul></ul>
  15. 15. Risk Analysis <ul><li>Likelihood </li></ul><ul><ul><li>How likely is the loss to occur? </li></ul></ul><ul><ul><li>What is the probability of this loss? </li></ul></ul><ul><li>Consequence </li></ul><ul><ul><li>If the loss occurred, how would it affect the project? </li></ul></ul><ul><ul><ul><li>Financially? </li></ul></ul></ul><ul><ul><ul><li>Operationally? </li></ul></ul></ul><ul><ul><ul><li>The ability of the project to meet its objectives? </li></ul></ul></ul>
  16. 16. Risk Evaluation Likelihood Consequence High Low Low High Medium risk High risk Low risk Medium risk
  17. 17. Risk Treatment <ul><li>Identify the options for reducing the likelihood or consequence for each risk </li></ul><ul><li>Determine potential benefits and costs of the options </li></ul><ul><li>Select the best options for the project </li></ul><ul><li>Develop and implement a detailed Risk Treatment Plan </li></ul><ul><li>Make appropriate provisions in project budgets </li></ul>
  18. 18. Risk Treatment <ul><li>Risk avoidance </li></ul><ul><ul><li>Possible? </li></ul></ul><ul><li>Loss control options </li></ul><ul><ul><li>Reduce likelihood </li></ul></ul><ul><ul><li>Reduce the expected consequence </li></ul></ul><ul><ul><li>Transfer the risk to another entity </li></ul></ul><ul><ul><ul><li>Contractual </li></ul></ul></ul><ul><ul><ul><li>Insurance </li></ul></ul></ul><ul><ul><ul><li>Joint ventures </li></ul></ul></ul>
  19. 19. Monitoring and review <ul><li>Continuous monitoring and review of risks ensures new risks are detected and managed, and that treatment plans are implemented and progressed effectively. </li></ul><ul><li>Method </li></ul><ul><ul><li>Implement a review process as part of the regular management meeting cycle. </li></ul></ul><ul><ul><li>Undertake major reviews at significant project phases and milestones. </li></ul></ul>
  20. 20. Communication and reporting <ul><li>Senior managers need to understand the risks they face, and risk reports provide a complement to other project reports in developing this understanding. </li></ul><ul><li>Method </li></ul><ul><ul><li>Submit reports on a regular basis or as required, as part of standard project reporting. </li></ul></ul>
  21. 21. Summary <ul><li>How do we define a project? </li></ul><ul><li>What is a risk? </li></ul><ul><li>How can we analyse and treat risks? </li></ul><ul><li>Questions? </li></ul>
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