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1. © Copyright GAFM Academy® “Project Risk Management”
Module 1
Risk Management in the Project Life Cycle

2. © Copyright GAFM Academy® “Project Risk Management”
Summary
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This module discusses the various categories of risk, the
processes associated with project risk management and
how they are being applied in the respective phases of the
project life cycle including the role of the project
organization and stakeholders associated with risk
management.

3. © Copyright GAFM Academy® “Project Risk Management”
Definition
Project Risk Management is the process in
which the project manager and project team
identify project risks, analyze and rank them,
and determine what actions need to be taken to
manage these risks.
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4. © Copyright GAFM Academy® “Project Risk Management”
Types of risk
 Known risk: risk that can be identified
 Known-unknown risk: risk is known, but the
impact is not known
 Unknown-unknown risk: both risk and its
impact cannot be identified
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Known risk
Known risk:
Cigarettes cause lung
cancer.

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Known-Unknown risk
Known risk:
This house will most likely roll
down the slope when landslides
occur.
Impact Unknown
The damages caused
by the impact of the
landslide cannot be
assessed.

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Unknown-Unknown risk
The scope of the product has expanded beyond the
original agreed requirements.
The above image is just for illustration only.

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Unknown-Unknown risk
During project execution, you have been informed by
your client of some unknown business requirements
and you have no idea what the impact would be on
the project should the customer decides to proceed
with these new requirements.

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Risk Management Processes

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Risk Management Planning
The process to determine how to approach, plan, and
execute the risk management activities for a project.
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Management
Planning

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Risk Identification
The process to determine which risks might affect the
project and documenting their characteristics.
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Identification

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Risk Assessment
The process used to evaluate the probability, severity and
impact of risks using qualitative and quantitative
assessment technique.
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Assessment

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Risk Response
The process of developing options and determining
actions to enhance opportunities and reduce threats to
the project’s objectives.
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Response

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Risk Monitoring and Control
The process used to track identified risks, monitors residual
risks, and identifies new risks. Risk Monitoring and Control is
an ongoing process throughout the life of the project.
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Monitoring &
Control

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Important Facts :
Project Risk Management
 Project risk management activities
commence from the initiation phase of
the project management life cycle.
 Known risks will be identified and
recorded in a Risk Register.

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Important Facts :
Project Risk Management
 Risk management activity continues
throughout the project life cycle.
 Risks will be monitored from the initiation
phase until project closure.

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Important Facts :
Project Risk Management
 Project risk management is not a
discrete stand-alone process, but is
integrated with other project
management processes.
 Project Scope Management, Project Cost
Management, Project Human Resource
Management, Project Procurement
Management, and Project Time
Management are associated with Risk
Management.

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Important Facts :
Project Risk Management
 Implementation of project risk
management activities is the
responsibility of all project
stakeholders.
 Project Status Update distributed to project
stakeholders include the status of all risk
items and the individual who has been
assigned to monitor a particular risk.

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Risk Management Processes are
required to ensure that …..
 All significant risks associated with the project are
identified
 Identified risks are understood with both the range of
potential consequences they represent and the likelihood
of occurrences
 Assessment is undertaken for individual risks relative to
other risks to support priority setting and resource
allocation.
 Strategies for treating the risks take into account of
opportunities to address more than one risk.

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Risk Originator
The individual who tells you
and the team about new risk.
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21. © Copyright GAFM Academy® “Project Risk Management”
 Someone who will be involved in the project.
 Take the responsibility to monitor the project in order
to identify any new risks.
 Make regular reports to the project manager, project
sponsor or client.
 Ensure that adequate resources are available for
managing and responding to a particular project risk.
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Risk Owner

22. © Copyright GAFM Academy® “Project Risk Management”
Role of the Project Manager on risk
management
 Manage and monitor the progress of all risks within the
project.
 Assess whether those risks are relevant to the project
 Manage all risks in the Risk Register
 Present risks to the Project Sponsor and Steering
Committee
 Communicate all decisions made by the Steering
Committee
 Monitor the progress of all risk mitigating actions.
 Update Project Management plan.
 Track and monitor effectiveness of response actions.
 Develop a schedule for review of the Risk Management
plan. 22

23. © Copyright GAFM Academy® “Project Risk Management”
Project Steering Committee
The Project Steering Committee confirm the risk
‘likelihood’ and ‘impact’ and assign risk mitigating
actions where appropriate.
The Project Steering Committee is responsible for:
 Regular review of all risks recorded in the Risk Register
 Identifying change requests required to mitigate risks
raised
 Allocating risk mitigating actions
 Closes risks which are not likely to cause a severe impact
on the project.
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24. © Copyright GAFM Academy® “Project Risk Management”
Project Risk Manager responsibilities
The Project Risk Manager is responsible for managing and
monitoring all aspects of the risk management process which
include:
 Development of the Risk Management Plan (RMP)
 Reviewing RMP with project team and obtaining approval
from the Project Manager
 Continuous monitoring of the project to identify any new or
changes to risks
 Execute planned mitigation strategies
 Continuous monitoring of the effectiveness of the Risk
Management Plan
 Regular reporting on the status of risks to the Project
Sponsor and Steering Committee.
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25. © Copyright GAFM Academy® “Project Risk Management”
Project Risk Management Framework
PROJECT EXECUTION, MONITORING & CONTROL
COMMUNICATIONS MANAGEMENT
Risk
Management
Planning
Risk
Identification
Risk
Assessment
Risk
Monitoring &
Control
Risk
Response

26. © Copyright GAFM Academy® “Project Risk Management”
Step 1 : Risk Management Planning
 How to APPROACH
 How to PLAN
 How to EXECUTE the risk
management ACTIVITIES for a
project.

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Step 2 : Identify the Risk
 Before risks can be properly managed, they need to
be identified.
 One useful way of doing this is defining categories
under which risks might be identified.
 For example, categories might include Corporate
Risks, Business Risks, Project Risks and System
Risks.
 These can be broken down even further into
categories such as environmental, economic, human
resources, et cetera.
 Another way is to categorize in terms of risk external
to the project and those that are internal.

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Step 3 : Analyse and evaluate the Risks
To identify only the major risk that will be
monitored and managed throughout the life of the
project.
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29. © Copyright GAFM Academy® “Project Risk Management”
Analyse and evaluate the Risks
 Once you have identified your risks you should analyze them by
determining how they might affect the success of your project.
 Risks should be analysed and evaluated in terms of likelihood of
occurrences and seriousness of impact if they do occur.
 Firstly, assess the likelihood of the risk occurring and give this a
rating of Low (L), Medium (M) or High (H) likelihood.
 Once you have rated the likelihood, assess the seriousness of the
impact of the risk if it did occur, eg rating at Low (L), Medium (M)
or High (H) seriousness.
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30. © Copyright GAFM Academy® “Project Risk Management”
Step 4: How will you manage or ‘treat’
the Risk?
The decision that you take on each risk will impact
the project budget and the project delivery schedule.
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31. © Copyright GAFM Academy® “Project Risk Management”
Step 5 : Monitor and Review Risk
 How frequent is the review of the Risk
Register will be undertaken (e.g.
Fortnightly, Monthly)
 How often risks will be monitored to
ensure that appropriate action is taken
should the likelihood or impact of
identified risks change?
 How often the Steering Committee or
Project Sponsor will be provided with an
updated Risk Register for
consideration?
 How often Risk status will be reported in
the Project Status Report to the Steering
Committee / Project Sponsor?
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end of module