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Risk Management Knowledge Area

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Risk Management Knowledge Area

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Project Mangement - overview of the Risk Management knowledge area within project management. Describes the 7 processes within Project Risk Management and the process groups impacted.

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Project Mangement - overview of the Risk Management knowledge area within project management. Describes the 7 processes within Project Risk Management and the process groups impacted.

Blog: https://agile-mercurial.com
YouTube: https://www.youtube.com/channel/UCPM82of2YuqIR1SgLGHa1eg
Twitter: https://twitter.com/agile_mercurial
Tumblr: https://agilemercurial.tumblr.com/

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Risk Management Knowledge Area

  1. 1. Project Risk Management Knowledge Area
  2. 2. Project Risk Management Overview • The process of planning for risk management, identifying risks, analyzing potential impacts, and response planning • Work to increase the likelihood of positive risk occurrence • Work to prevent the occurrence of negative risks
  3. 3. Project Risk Management Processes • 11.1 Plan Risk Management • 11.2 Identify Risks • 11.3 Perform Qualitative Risk Analysis • 11.4 Perform Quantitative Risk Analysis • 11.5 Plan Risk Responses • 11.6 Implement Risk Responses • 11.7 Monitor Risks
  4. 4. Risk Management Concepts
  5. 5. Threats and Opportunities Threat Negative Risk A potential bad thing that could occur Opportunity Positive Risk A potential good thing that could occur
  6. 6. Risks Uncertainty •Lack of confidence in an event occurring •Lack of knowledge or understanding of a possible event Risk Factor •Attributes of risk •Probability, Occurrence Frequency, Possible Outcomes Risk Averse •Avoiding risk, inability to take risks Risk Tolerance •The acceptability or unacceptability of taking risks Risk Threshold •The point at which risks are not tolerated or not acceptable
  7. 7. 11.1 Plan Risk Management Part of the Planning Process Group
  8. 8. 11.1 Plan Risk Management • Part of the Planning Process Group • The process of describing how risk management activities will be conducted
  9. 9. Risk Management Plan Methodology The tools and approaches that the project intends to use while performing risk management Roles and Responsibilities Identify the resource that will perform the activity Risk Budgeting Plan for handling contingency and management reserves Timing Frequency of risk management activity occurrence Risk Categories Types of risks anticipated and the classification of those risks
  10. 10. Risk Management Plan Stakeholder Tolerances How likely various stakeholders are accepting or unaccepting of risks Reporting Formats The documentation procedures for the risk management process Probability and Impact Define the risk levels in relation to the possible probably or impact of a risk Risk Tracking The process of recording and auditing risks
  11. 11. 11.2 Identify Risks Part of the Planning Process Group
  12. 12. 11.2 Identify Risks • Part of the Planning Process Group • The process involved with figuring out which risks are relevant to the project and documenting them • Concerned with documenting existing risks • Risk identification should be a far reaching and collaborative process • Risks can be identified later or a risks information can change - this is an ongoing process
  13. 13. Risk Identification Techniques Documentation Reviews Review project documentations and look for risks Requirements or Information Gathering Brainstorming, Root Cause Analysis, Delphi Technique, Interviews, Checklist Analysis, Assumptions Analysis Diagramming Ishikawa diagram (Cause and Effect) and quality control tools, SWOT analysis Expert Judgement Identified risks from experts in the field Lessons Learned Lessons learned from prior projects
  14. 14. Risk Register • The output of the Identify Risks process • Contains information on the possible risks faced in the project • Includes: • List of risks that were identified • The possible impact of the risk • Possible identified causes of risks • Responses to risks are added during the Plan Risk Response process
  15. 15. 11.3 Perform Qualitative Risk Analysis Part of the Planning Process Group
  16. 16. 11.3 Perform Qualitative Risk Analysis • Part of the Planning Process Group • Prioritizing risks by probability of occurrence or the impact of the risks • A high probability risk with a high impact will likely be at the top of the list as a high priority risk • The likelihood of a risk occurring is a high probability risk • The risk impact is severity of the impact on the project if the risk occurs • Risks are rated by standard outlined in the Risk Management Plan (Developed in the Plan Risk Management process)
  17. 17. Techniques of Qualitative Risk Analysis Probability and Impact Matrix A method of sorting risks that should be standardized between projects for future needs Risk Data Quality Assessment The usefulness of the information about risks and how useful it is in risk evaluation Risk Categorization Placing risks in similar groups to help manage risks and determine areas of uncertainty or help find find root causes of risks Risk Urgency Assessment Identifying the sooner to occur risks to ensure focus is placed on upcoming risks
  18. 18. 11.4 Perform Quantitative Risk Analysis Part of the Planning Process Group
  19. 19. 11.4 Perform Quantitative Risk Analysis • Part of the Planning Process Group • Numerically analyzing risks by the impact of the risk using metrics such as the cost of the risk or the schedule delay of the risk • Aids in decision making related to the risk • Assists in creating costs and schedule reserves • Identifies the largest impact risks • Less subjective than Qualitative Risk Analysis, but more difficult to perform and not always needed in a project with low risk/low time duration
  20. 20. Techniques for Performing Quantitative Risk Analysis Probability Distribution Graphically display the likelihood of risks to occur over time Sensitivity Analysis Determine which risks will have the highest potential impact Tornado Diagram A graphical tool showing positive and negative risk impacts
  21. 21. Techniques for Performing Quantitative Risk Analysis • Expert Judgement • Experts aid in the discovery of possible costs and schedule impacts to risks bases on their own experience • Expected Monetary Value (EMV) Analysis • Calculates the average outcome on possible scenarios • Positive values indicate a positive risk, while negative values indicate a negative risk • Modeling and Simulation • Usually done by computer, it is used to find the potential impact of risks on the project • Monte Carlo Analysis – can provide the probability of completing a project by the estimated completion date and the estimated budget
  22. 22. 11.5 Plan Risk Responses Part of the Planning Process Group
  23. 23. 11.5 Plan Risk Responses • Part of the Planning Process Group • The process of creating plans for handling positive and negative risks • Goals include developing ways to improve the likelihood of positive risk (opportunity) of occurring and reducing the likelihood of negative risk (threat) of occurring • Develop contingency plans for risks if they do occur
  24. 24. Responding to Risks
  25. 25. Negative Risks – Threats • Escalate • Risk is outside the scope of the project and not within the authority of the project manager or team to handle, risk is escalated up • Avoidance • Work to eliminate the occurrence of the threat • Transfer • Shift the possible impact to a third party, such as insurance or contracting out parts of the project transferring the risk to another entity • Mitigate • Reduce the likelihood of a risk occurring or reduce the impact of a risk on the project • Accept • Accept that the risk may occur and deal with it when it happens
  26. 26. Positive Risks – Opportunities • Escalate • Risk is outside the scope of the project and not within the authority of the project manager or team to handle, risk is escalated up • Exploit • Working to make sure that the risk occurs and exploiting the opportunity • Enhance • Increasing the likelihood of the opportunity’s occurrence • Share • Sharing the opportunity with a third party, usually merges multiple advantages increasing the possibility of a positive risk occurrence • Accept • Accept the risk if/when it occurs, but not working to actively realize the opportunity
  27. 27. Contingency Risk Response • If a risk occurs, plans to handle or correct the impact could be created for severe risks • Contingency Plans are developed to respond to the occurrence of a risk describe how the occurrence will be handled
  28. 28. 11.6 Implement Risk Responses Part of the Executing Process Group
  29. 29. 11.6 Implement Risk Responses • Part of the Executing Process Group • Risks responses plans are implemented to handle or deal with risks • The action of minimizing the threat or maximizing the opportunities • Implement approved change requests or project document updates
  30. 30. 11.7 Monitor Risks Part of the Monitoring & Controlling Process Group
  31. 31. 11.7 Monitor Risks • Part of the Monitoring & Controlling Process Group • The process of monitoring or tracking identified risks and identifying possible new risks • Evaluation of the risk management processes • Reassess risks to determine their current priority and update plans as needed • Carry out audits of risks and ensure planned responses are adequate
  32. 32. Sources • A Guide to the Project Management Body of Knowledge – PMBOK 6th Edition • https://www.pmi.org/ Joshua Render https://agile-mercurial.com

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