Presentation on Risk Management

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Prepare for the unpredictable : your guide to risk management

2. Agenda of the Webinar
Project Management Institute, A Guide to the Project Management Body of Knowledge
(PMBOK ® Guide) - Fifth Edition, Project Management Institute, Inc., 2013, Page 309 www.edureka.in/pmpSlide 1
• What is Risk?
• Risk vs Issue
• Components of Risks
• Example of Risk Breakdown Structure
• Project Risk Management
• Strategies for negative risks or threats
• Strategies for positive risks or threats
• How you deal with risk

3. What is Risk?
Project Management Institute, A Guide to the Project Management Body of Knowledge
(PMBOK ® Guide) - Fifth Edition, Project Management Institute, Inc., 2013, Page 309
“Project Risk Management includes the
processes of conducting risk management
planning, identification, analysis, response
planning, and controlling risk on a project.
The objectives of project risk management are to
increase the likelihood and impact of positive
events, and decrease the likelihood and
impact of negative events in the project.”
www.edureka.in/pmpSlide 3
Courtesy : want2discover.com

4. Risk vs. Issue
Risk Issue
Risk is an uncertain event or event that might
happen in future Issue is an event that has already occurred
Once risk is identified, its impact should be analyzed
and the response plan should be prepared
Once the impact of Issue is analyzed, the same
should be resolved or escalated
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5. Components of Risk
Amount of uncertainty and risk is
Highest at - the start of the project and
lowest at - the end of the project
The three components
of risk: R = P * I
R - Risk
P - Probability of Risk Event
I - Impact of Risk Event (Risk
Event Value) and the
relationship between the
components
Start End
www.edureka.in/pmpSlide 5

6. www.edureka.in/pmpSlide 6
Example of Risk Breakdown Structure (RBS)
Project
Technical External Organizational Project
Management
Requirements
Technology
Complexity and
interfaces
Performances
and reliability
Quality
Subcontractors
and suppliers
Regulatory
Market
Customer
Weather
Project
dependencies
Resources
Funding
Prioritization
Estimating
Planning
Controlling
Communication
The risk breakdown (RBS) lists the categories and sub-categories within which risks may arise for a typical project.
Different RBS’s will be appropriate for different types of projects and different types of organizations. One benefit of this
approach is to remind participants in a risk identification exercise of the many sources from which project risk may arise

7. www.edureka.in/pmpSlide 7
PMI® PMPSM – Project Risk Management
This is the process where the team identifies as many risks as possible that may affect the project from the various
project artifacts. There are two categories of risk:
 Pure Risks – These risks have only negative outcomes.
 Business Risks – This may have both positive or negative outcomes.
Participants of Risk Identification activity includes Project Manager, Team members, risk management team, customers,
subject matter experts, end users and other project management experts.
It is an iterative process as new risks can come up as the project progresses.
Identify Risks
RISKS
Pure Risks – only negative outcome
Business Risks – This may have both
positive or negative outcomes.
http://www.clipartheaven.com/show/clipart/business_&_office/cartoons_(a_-
_c)/businessman_slipping-gif.html

8. www.edureka.in/pmpSlide 8
PMI® PMPSM – Project Risk Management
Risk response planning — Strategies
Common Guiding Principles for Risk Response Strategies for and Opportunities:
 Timely
 Effort should be appropriate to severity
 One response can address multiple risks
 More than one response can address same risk
 By addressing root cause more than one risk can be addressed
 Involve all relevant stakeholders when selecting strategy
Strategies for Threats
 Avoid
 Transfer
 Mitigate
 Accept
Strategies for Opportunities:
 Exploit
 Share
 Enhance
 Accept

9. www.edureka.in/pmpSlide 9
PMI® PMPSM – Project Risk Management
Risk response planning — Common strategy and reserves
Common Strategy for Threats and Opportunities:
Acceptance
 Passive acceptance requires no action, leaving the project team to deal with the impact of
threats or opportunities as they occur.
 The most common active acceptance strategy is to establish a contingency reserve,
including amounts of time, money, or resources to handle known — or even sometimes
potential, unknown — threats or opportunities.
Two kinds of reserves for time and cost:
Contingency Reserves
for “known unknowns” (identified risks) and are part of the project scope and cost baselines
Management Reserves
for “unknown unknowns” and are not a part of the project cost baseline, but are included in the
budget for the project.

10. www.edureka.in/pmpSlide 10
Strategies for negative risks or threats
When you are planning your project, risk are still uncertain; they have not happened yet. But eventually some of the
risks that you plan for do happen. That is when you have to deal with them. There are four basic ways to handle a risk:
 The best thing that you can do with a risk is avoid it — if you can prevent it from
happening, it definitely will not hurt your project
Avoid
 One effective way to deal with a risk is to pay someone else to accept it for you.
The most common way to do this is to buy insurance
Transfer
 If you can not avoid the risk, you can mitigate it. This means taking some sort of
action that will cause it to do as little damage to your project as possibleMitigate
 When you cannot avoid, mitigate, or transfer a risk, then you have to accept
it. But even when you accept a risk, at least you have looked at the
alternatives and you know what will happen if it occurs
Accept
Source: Headfirst Second Edition

11. www.edureka.in/pmpSlide 11
Strategies for positive risks or threats
As stressed throughout the chapter, risks can be both positive or negative, and where positive risks are concerned, the
project manager wants to take steps to make them more likely.
 This is when you do everything you can to make sure that you take advantage of
an opportunity. You could assign your best resources to the project. Or you could
allocate more than enough funds to be sure to get the most out of it.
Exploit
 Sometimes it is harder to take advantage of an opportunity on your own. Then
you might call in another company to share in it with you.
Share
 This is when you try to make the opportunity more probable by influencing its
triggers. If getting a picture of a rare bird is important, then you might bring
more food that it is attracted to.
Enhance
 Just like a negative risk, sometimes an opportunity just falls in your lap. The
best thing to do is accept it!
Accept
Source: Headfirst Second Edition

12. www.edureka.in/pmpSlide 12
How you deal with risk
 Flooding could cause serious damage to your
equipment, so you buy an insurance policy that
covers damage
Avoided
Transferred
Mitigated
Accepted
 The manufacturer issues a warning that the safety
equipment you are using has a small but nonzero
probability of failure under the conditions that you
will be facing. You replace it with more appropriate
equipment
Avoided
Transferred
Mitigated
Accepted
 Stormy weather and high winds could cause very
slippery conditions, so you put up a tent and wear
slip-resistant footwear to keep from loosing your
footing
Avoided
Transferred
Mitigated
Accepted
 You buy a surge protector to make sure a
lightning strike will not blow out all of your
equipment.
Avoided
Transferred
Mitigated
Accepted
Source: Headfirst Second Edition

13. www.edureka.in/pmpSlide 13
How you deal with risk (cont.)
 A mud slide would be very damaging to your
project, but there is nothing you can do about it
Avoided
Transferred
Mitigated
Accepted
 A team member discovers that the location you
planned on using is in a country that is
considering regulations that could be expensive
to comply with. You work with a surveying team
to find a new location.
Avoided
Transferred
Mitigated
Accepted
 Surrounding geological features could interfere
with your communications equipment, so you
bring a flare gun and rescue beacon in case it
fails
Avoided
Transferred
Mitigated
Accepted
Source: Headfirst Second Edition

14. Q&A
www.edureka.in/pmpSlide 14

15. Thank You