Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Risk Management
Best PMP Exam Simulator
Risk is defined as an uncertain event or condition, that if it occurs has a positive or negative effect on
one or more of ...
Necessity of Risk Management
• Any project is subject to risk
• Risk can be minimized BUT CAN NOT be eliminated
• Risk Man...
The ranking of RISK analysis is directly proportional to the‘Tolerance’ of the involved party
WHO MAY HAVE RISK ?
• High R...
Risk Attitudes
Organizations and stakeholders are willing to accept varying degrees of risk depending on their
risk attitu...
Risk Attitudes
2. RiskTolerance : Degree, amount or volume of risk that an organization or individual will
withstand.
 “I...
RiskTolerance Levels
Different people & different organizations have different tolerances for risks, which depends on the
...
A. It is a scientific approach to identify, analyze, assign and respond to the risk regularly across the
project life & so...
Project Risk Management Processes
Start
Project /
Enter
Phase
Initiating Planning Executing Closing
End
Project /
Exit Pha...
The process of defining how to conduct risk management activities for a project.
11.1 Plan Risk Management
www.testudaan.c...
The Risk factors include:
• Risk Event
 What might happen?
• Probability
 What is the chance of it happening?
• Impact (...
Project Risk Management includes TWO management plans:
1. Risk Management Plan (o/p of Plan Risk Management process)
2. Ri...
Risk Management Plan
• Methodologies-The approach, tools, techniques, data sources the team plans to use to manage
risk on...
• Tracking - How risk activities will be documented for the current project and how risk management
process will be audite...
Requirements
Technology
Complexity &
Interfaces
Performance &
Reliability
Quality
TECHNICAL
Subcontractors &
Suppliers
Reg...
Definitions of Risk Probability and Impact
Plan Risk Management - Output
www.testudaan.com 7/24/201716 Best PMP Exam Simul...
The process of determining which risk may affect the project and documenting their characteristics
11.2 Identify Risks
www...
Information gathering techniques
• Brainstorming
 Here the goal is to obtain a comprehensive list of project risks
 Ofte...
• Cause and effect diagrams
 Also known as Ishikawa or fishbone diagrams
 Useful for identifying causes of risks
• Syste...
Risk Register
1. Identified Risk
2. Root Cause
3. Potential Response
Identify Risks - Output
www.testudaan.com 7/24/201720...
The process of prioritizing risks for further analysis of action by assessing and combining
their probability of occurrenc...
Risk probability and impact assessment
• Risk probability (p) assessment investigates the likelihood that each specific ri...
Probability and Impact Matrix :
Organization should determine which combinations of probability and impact result in a cla...
Risk Data Quality Assessment
• It involves examining –
 the degree to which the risk is understood AND
 the accuracy, qu...
• List of risks, which you don’t want to forget about, but which you don’t need to track closely
• You will keep a watch o...
Risk Register Updates
4. Identified Risk
5. Root Cause
6. Potential Response
4. Category
5. Sub-Category
6. Prob. of Occur...
The process of numerically analyzing the effect of identified risks on overall project
objectives. If not necessary, this ...
• Process is performed on risks that have been prioritized by the perform qualitative risk analysis
process as potentially...
Data Gathering and RepresentationTechniques
• Interviewing
• Probability Distribution
Quantitative Risk Analysis and Model...
Data Gathering and RepresentationTechniques -
Interviewing
The information
needed depends upon
the type of probability
dis...
Modeling and Simulation (Monte CarloTechnique): A technique that uses simulation to show
the probability of completing you...
ModelingTechniques - Sensitivity Analysis
* A quantitative risk analysis and modeling technique used
• To help determine w...
ModelingTechniques -
Sensitivity Analysis : Example of aTornado diagram
• is a special type of bar chart used in sensitivi...
ModelingTechniques -
Sensitivity Analysis : Characteristics of aTornado diagram
• The longer the bar the more sensitive th...
ModelingTechniques -
What is Expected MonetaryValue (EMV) ?
* Is a statistical concept that calculates the average outcome...
Risk register updates
13. Probabilistic analysis of the project
14. Probability of achieving cost and time
objectives
15. ...
The process of developing options and actions to enhance
opportunities and to reduce threats to project objectives
11.5 Pl...
• It includes the identification and assignment of one person (an owner for risk response) to take
responsibility for each...
Risks
Negative
[Threats]
Positive
[Opportunities]
Risk that may
have positive
impacts on
project
objectives if
they occur
...
Strategies for Negative Risks
Avoid
• Risk avoidance is to eliminate the threat posed by an adverse risk
e.g. changing the...
Strategies for Negative Risks
Mitigate
• It implies a reduction in the probability and / or impact of an adverse risk even...
Accept
It is a strategy that is adopted because it is seldom possible to eliminate all risk from a project
• It indicates ...
Exploit
• It seeks to eliminate the uncertainty associated with a particular upside risk by making the
opportunity definit...
Strategies for Positive Risks
Enhance
• It modifies the size of an opportunity to increase probability and / or positive i...
• Risk owners and assigned responsibilities
• Agreed-upon response strategies
• Specific actions to implement the chosen r...
Risk register updates
Residual Risks
• that are expected to remain after planned responses have been taken, as well as tho...
Risk register updates
18. Risk triggers
19. Risk symptoms
20. Risk warnings
21. Risk response owners
22. Risk response str...
The process of (a) implementing risk response plans, (b) tracking identified risks, (c)
monitoring residual risks, (d) ide...
Risk Reassessment
• Determining if project assumptions are still valid
• Determining if contingency reserves of cost or sc...
Change Requests
 Implementing contingency plans or workaround may result in a change request
*Workaround: is a response t...
Thank you
Saraca Solutions Pvt. Ltd.
Best PMP Exam Simulator
Upcoming SlideShare
Loading in …5
×

8. Risk Management

647 views

Published on

Risk is defined as an uncertain event or condition, that if it occurs has a positive or negative effect on one or more of the project objective(s) – scope, time, cost and quality

Published in: Education
  • Be the first to comment

8. Risk Management

  1. 1. Risk Management Best PMP Exam Simulator
  2. 2. Risk is defined as an uncertain event or condition, that if it occurs has a positive or negative effect on one or more of the project objective(s) – scope, time, cost and quality 11. Project Risk Management www.testudaan.com 7/24/20172 Best PMP Exam Simulator
  3. 3. Necessity of Risk Management • Any project is subject to risk • Risk can be minimized BUT CAN NOT be eliminated • Risk Management is about “Minimizing negative impacts and Maximizing positive impacts” on the project objectives • Risk is required for Growth & Returns Why Manage Risks ? 1. Helps stakeholders to understand the nature of the project. 2. Helps team members in defining strengths & weaknesses. 3. Helps to integrate project resources. 4. Helps in prioritizing resources & efforts. Project Risk Management www.testudaan.com 7/24/20173 Best PMP Exam Simulator
  4. 4. The ranking of RISK analysis is directly proportional to the‘Tolerance’ of the involved party WHO MAY HAVE RISK ? • High Risk for‘A’ may not be High risk for‘B’, since tolerance levels of stakeholders vary ! RISK REFERREDTOWHAT ? • Priorities of Objectives may be different to different stakeholders ! WHATTIME AREWE EXPECTING RISK ? • Risk varies withTIME and hence its Impacts can be of different levels at differentTIME ! Basic Risk Analysis Project Risk Management www.testudaan.com 7/24/20174 Best PMP Exam Simulator
  5. 5. Risk Attitudes Organizations and stakeholders are willing to accept varying degrees of risk depending on their risk attitude The risk attitudes of the organizations and stakeholders may be influenced by factors classified into three themes such as : 1. Risk Appetite : Degree of uncertainty an entity is willing to take on in anticipation of a reward.  “We love taking risks, we were able to grow just because of our risk taking attitude” – HighAppetite for Risks  “We need to insure that project team takes on all commitments, we do not want to confront a situation where stakeholder interest is at risk, we want to play safe” – LowAppetite for Risks Project Risk Management www.testudaan.com 7/24/20175 Best PMP Exam Simulator
  6. 6. Risk Attitudes 2. RiskTolerance : Degree, amount or volume of risk that an organization or individual will withstand.  “I can take risks up to 100, 000 USD or I can manage schedules variance of 10-20%” Ask the stakeholder “How much is too much for you ?” 3. RiskThreshold : Refers to measures along the “level of uncertainty or the level of impact” at which a stakeholder may have a specific interest by further quantifying the Risk Attitude i.e. Below that risk threshold, the organization will accept the risk and above that risk threshold, the organization will not tolerate the risk  Ask the stakeholder “Will you be willing to take risk of 100,000 USD with 50% probability of occurring ?” Project Risk Management www.testudaan.com 7/24/20176 Best PMP Exam Simulator
  7. 7. RiskTolerance Levels Different people & different organizations have different tolerances for risks, which depends on the organizational strategies, capacity, capabilities, etc. Based on above features broadly organizations are differentiated into following three categories: 1. Risk Averse : Limited Risk taking capacities. 2. Risk Neutral :Take Risk only if proportionate to opportunities. 3. Risk Seekers:Take risk even if present opportunities are less, keeping in mind future business prospects. Project Risk Management www.testudaan.com 7/24/20177 Best PMP Exam Simulator
  8. 8. A. It is a scientific approach to identify, analyze, assign and respond to the risk regularly across the project life & so as to achieve the maximum towards meeting project objectives. B. Provides input for realistic planning of- a. project schedule, b. cost estimates and c. resource requirements to achieve the project objectives‘successfully and efficiently’. Project Risk Management www.testudaan.com 7/24/20178 Best PMP Exam Simulator
  9. 9. Project Risk Management Processes Start Project / Enter Phase Initiating Planning Executing Closing End Project / Exit Phase Monitoring and Control Process Process Groups Initiating Planning Executing Monitoring & Control Closing Plan Risk Management Identify Risks Perform Qualitative RiskAnalysis Perform Quantitative RiskAnalysis Plan Risk Responses Control Risks 7/24/20179 www.testudaan.com Best PMP Exam Simulator
  10. 10. The process of defining how to conduct risk management activities for a project. 11.1 Plan Risk Management www.testudaan.com 7/24/201710 Best PMP Exam Simulator
  11. 11. The Risk factors include: • Risk Event  What might happen? • Probability  What is the chance of it happening? • Impact (or Amount at Stake)  What is the financial impact? • Exposure = Probability X Amount at Stake • Risk proximity  When it will happen - How soon ? Plan Risk Management www.testudaan.com 7/24/201711 Best PMP Exam Simulator
  12. 12. Project Risk Management includes TWO management plans: 1. Risk Management Plan (o/p of Plan Risk Management process) 2. Risk Response Plan (o/p of Plan Risk Responses process) • Risk Management Plan guidelines the identification, analysis, responses and monitoring & controlling activities • It does not include the list of actual project risks, but only the approach to risk management activities • Risk Response Plan (Risk Register) includes the actual list of risks, with the risk probabilities, impacts and planned responses Plan Risk Management www.testudaan.com 7/24/201712 Best PMP Exam Simulator
  13. 13. Risk Management Plan • Methodologies-The approach, tools, techniques, data sources the team plans to use to manage risk on the project • Roles and responsibilities- A defined role with clear responsibilities for each team member who will play a part in the project’s risk activities • Budgeting - Estimates of the financial resources that will be needed for the implementation of each risk activity, to be included in the project’s Cost Baseline (CBL). Also included here are the procedures to be used in applying Contingency and Management Reserves • Timing -When and how frequently the Risk Management processes will be performed during the project • Risk categories- The risk categorization activity is often performed using a Risk Breakdown Structure (RBS), which shows graphically the areas in which risks may arise. Areas that are broken down typically include technical, organizational, project management and external Plan Risk Management - Output www.testudaan.com 7/24/201713 Best PMP Exam Simulator
  14. 14. • Tracking - How risk activities will be documented for the current project and how risk management process will be audited • Definitions of risk probability and impact -All identified risks are rated in terms of priority in the Perform Qualitative Risk Analysis process, typically with the use of a Probability and Impact (P-I) Matrix. However, for the P-I values that populate the matrix to be meaningful, definitions must be established • Probability and impact matrix -To be used in the following process, Perform Qualitative Risk Analysis, but selected in this process from the OPAs and tailored as necessary to fit the needs of the project Risk Management Plan .. contd. • Revised stakeholder’s tolerances - tolerances may need to be revised here • Reporting formats - How would the results of the risk management process be documented, analyzed, and communicated with the content and format of the risk register as well as any other risk reports required Plan Risk Management - Output www.testudaan.com 7/24/201714 Best PMP Exam Simulator
  15. 15. Requirements Technology Complexity & Interfaces Performance & Reliability Quality TECHNICAL Subcontractors & Suppliers Regulatory Market Customer Weather EXTERNAL Project Dependencies Resources Funding Prioritization ORGANIZATIONAL Estimating Planning Controlling Communication PROJECT MANAGEMENT PROJECT RBS Provide a means for grouping potential causes of risk Plan Risk Management - Output www.testudaan.com 7/24/201715 Best PMP Exam Simulator
  16. 16. Definitions of Risk Probability and Impact Plan Risk Management - Output www.testudaan.com 7/24/201716 Best PMP Exam Simulator
  17. 17. The process of determining which risk may affect the project and documenting their characteristics 11.2 Identify Risks www.testudaan.com 7/24/201717 Best PMP Exam Simulator
  18. 18. Information gathering techniques • Brainstorming  Here the goal is to obtain a comprehensive list of project risks  Often performed with a multidisciplinary set of experts who are not part of the team • Delphi technique  It is a way to reach a consensus of project risk experts who participate in this technique anonymously  Helps reduce bias in the data and having undue influence on the outcome • Interviewing  Helps to identify risks after interviewing project participants, stakeholders and subject matter experts (SMEs) • Root cause analysis  It is a specific technique to identify a problem, investigate the underlying causes that lead to it and develop preventive actions to avoid from happening again Identify Risks –T &T www.testudaan.com 7/24/201718 Best PMP Exam Simulator
  19. 19. • Cause and effect diagrams  Also known as Ishikawa or fishbone diagrams  Useful for identifying causes of risks • System or process flow charts  Shows how various system elements interrelate and mechanism of causation • Influence diagrams  Are graphical representations of situations showing causal influences, time ordering of events and other relationships among variables and outcomes (refer example shown below) Project Estimates Risk Condition Project ActivityDeliverables Project Estimates Risk Condition Project ActivityDeliverables Diagramming techniques Identify Risks –T &T www.testudaan.com 7/24/201719 Best PMP Exam Simulator
  20. 20. Risk Register 1. Identified Risk 2. Root Cause 3. Potential Response Identify Risks - Output www.testudaan.com 7/24/201720 Best PMP Exam Simulator
  21. 21. The process of prioritizing risks for further analysis of action by assessing and combining their probability of occurrence and impact 11.3 Perform Qualitative Risk Analysis www.testudaan.com 7/24/201721 Best PMP Exam Simulator
  22. 22. Risk probability and impact assessment • Risk probability (p) assessment investigates the likelihood that each specific risk will occur • Risk impact (i) assessment investigates the potential effect on a project objective such as schedule, cost, quality, or performance, including both negative effects for threats and positive effects for opportunities  For objective analysis the probability and impact rating scales are used • Risks with low ratings of probability and impact will be included within the risk register as part of the watch list for future monitoring Perform Qualitative Risk Analysis –T &T www.testudaan.com 7/24/201722 Best PMP Exam Simulator
  23. 23. Probability and Impact Matrix : Organization should determine which combinations of probability and impact result in a classification of high risk (Red condition), moderate risk (Yellow condition) and low risk (Green condition) 0.80 0.60 0.40 0.20 0.10 0.10 0.20 0.45 0.90 0.05 0.04 0.03 0.02 0.01 0.09 0.07 0.05 0.03 0.01 0.18 0.14 0.10 0.06 0.02 0.36 0.28 0.20 0.12 0.04 0.72 0.56 0.40 0.20 0.08 0.05 Probability Impact The no of steps in the scale are usually established when defining the risk attitude of the organization Perform Qualitative Risk Analysis –T &T www.testudaan.com 7/24/201723 Best PMP Exam Simulator
  24. 24. Risk Data Quality Assessment • It involves examining –  the degree to which the risk is understood AND  the accuracy, quality, reliability and integrity of risk data • If data quality is unacceptable, it may be necessary to gather better data Risk Urgency Assessment • Risks requiring near-term responses may be considered more urgent to address • Indicators of urgency or priority could include :  Probability of detecting the risk  Time to implement a risk response  Symptoms and warnings signs  Risk Urgency rating (H / M / L) Perform Qualitative Risk Analysis –T &T www.testudaan.com 7/24/201724 Best PMP Exam Simulator
  25. 25. • List of risks, which you don’t want to forget about, but which you don’t need to track closely • You will keep a watch on this list from time to time to keep an eye on things Watch Lists –T &T www.testudaan.com 7/24/201725 Best PMP Exam Simulator
  26. 26. Risk Register Updates 4. Identified Risk 5. Root Cause 6. Potential Response 4. Category 5. Sub-Category 6. Prob. of Occurrence(%) 7. Impact on which of the project objective(s) ? 8. Impact (%) 9. Risk Ranking (H/M/L) 10. Occurring in near term ? 11. Time to implement response for near term risk 12. Risk Urgency/Priority rating (H/M/L) Perform Qualitative Risk Analysis - Output www.testudaan.com 7/24/201726 Best PMP Exam Simulator
  27. 27. The process of numerically analyzing the effect of identified risks on overall project objectives. If not necessary, this process may be skipped 11.4 Perform Quantitative Risk Analysis www.testudaan.com 7/24/201727 Best PMP Exam Simulator
  28. 28. • Process is performed on risks that have been prioritized by the perform qualitative risk analysis process as potentially and substantially impacting the project’s competing demands • It analysis the impact of those risks on project objectives • It is mostly used to evaluate the aggregate effect of risks on projects • The project manager should use expert judgment to determine the need for the viability of quantitative risk analysis • This process should be repeated , as part of, the control risk process to determine if the overall project risk has been satisfactorily decreased Perform Quantitative RiskAnalysis - Activities www.testudaan.com 7/24/201728 Best PMP Exam Simulator
  29. 29. Data Gathering and RepresentationTechniques • Interviewing • Probability Distribution Quantitative Risk Analysis and ModelingTechniques • SensitivityAnalysis • Expected MonetaryValue (EMV) • Modeling and Simulation (e.g. Monte Carlo Analysis) Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201729 Best PMP Exam Simulator
  30. 30. Data Gathering and RepresentationTechniques - Interviewing The information needed depends upon the type of probability distributions that will be used Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201730 Best PMP Exam Simulator
  31. 31. Modeling and Simulation (Monte CarloTechnique): A technique that uses simulation to show the probability of completing your project on time and within budget • Overall risk of the project is determined and not the activities • Probability of completing the project on a specific day and within the specified cost is determined • All the path convergence in the network diagrams are considered • Impacts to your schedule and budget is evaluated • Since the mathematical computations are very complicated, analysis is usually done with a computer program • Creates triangular, beta, uniform and lognormal probability distributions Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201731 Best PMP Exam Simulator
  32. 32. ModelingTechniques - Sensitivity Analysis * A quantitative risk analysis and modeling technique used • To help determine which risks have the most potential impact on the project • To examine the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values • To display results in the form of aTornado diagram  is useful for comparing relative importance and impact of variables that have a high degree of uncertainty to those that are more stable  is also helpful in analyzing risk-taking scenarios enabled on specific risks whose quantitative analysis highlights possible benefits greater than corresponding identified negative impacts Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201732 Best PMP Exam Simulator
  33. 33. ModelingTechniques - Sensitivity Analysis : Example of aTornado diagram • is a special type of bar chart used in sensitivity analysis for comparing the relative importance of the variables • theY-axis contains each type of uncertainty at base values, and the X-axis contains the spread or correlation of the uncertainty to the studied output • each uncertainty contains a horizontal bar and is ordered vertically to show uncertainties with a decreasing spread from the base values Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201733 Best PMP Exam Simulator
  34. 34. ModelingTechniques - Sensitivity Analysis : Characteristics of aTornado diagram • The longer the bar the more sensitive the project objective is to the risk • The risks are presented in descending order, with the largest impact on the top and the least impact on the bottom • It allows the team to focus on those risks with the greatest impact on a project objective Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201734 Best PMP Exam Simulator
  35. 35. ModelingTechniques - What is Expected MonetaryValue (EMV) ? * Is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen • EMV of opportunities are generally expressed as positive values (+), whereas of threats are expressed as negative values (-) • EMV for a project is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding the products together • Most common method of this analysis is by using DecisionTree Analysis Perform Quantitative RiskAnalysis –T &T www.testudaan.com 7/24/201735 Best PMP Exam Simulator
  36. 36. Risk register updates 13. Probabilistic analysis of the project 14. Probability of achieving cost and time objectives 15. Prioritized list of quantified risks 16. Any trends observed ? 17. Expected MonetaryValue (EMV) 13. Identified Risk 14. Root Cause 15. Potential Response 16. Category 17. Sub-Category 18. Prob. of Occurrence(%) 19. Impact on which of the project objective(s) ? 20. Impact (%) 21. Risk Raking (H/M/L) 22. Occurring in near term ? 23. Time to implement response for near term risk 24. Risk Urgency/Priority rating (H/M/L) Perform Quantitative RiskAnalysis - Output www.testudaan.com 7/24/201736 Best PMP Exam Simulator
  37. 37. The process of developing options and actions to enhance opportunities and to reduce threats to project objectives 11.5 Plan Risk Responses www.testudaan.com 7/24/201737 Best PMP Exam Simulator
  38. 38. • It includes the identification and assignment of one person (an owner for risk response) to take responsibility for each agreed-to and funded risk response • Risk responses should be  appropriate for the impact of the risk,  cost-effective in meeting the challenge,  realistic within the project context,  agreed upon by all parties involved and owned by a responsible person • Selecting the optimum risk response from several options is often required Plan Risk Responses www.testudaan.com 7/24/201738 Best PMP Exam Simulator
  39. 39. Risks Negative [Threats] Positive [Opportunities] Risk that may have positive impacts on project objectives if they occur Risk that may have negative impacts on project objectives if they occur Avoid Mitigate Transfer Acceptance Exploit Share Enhance Plan Risk Responses – Risk Response Strategies www.testudaan.com 7/24/201739 Best PMP Exam Simulator
  40. 40. Strategies for Negative Risks Avoid • Risk avoidance is to eliminate the threat posed by an adverse risk e.g. changing the project management plan to eliminate the threat entirely OR to change the objective that is in jeopardy such as extending the schedule, changing the strategy or reducing scope OR to shut down the project entirely OR during the initial stages of the project, clarifying requirements, obtaining information, improving communication or acquiring expertise Transfer • Requires shifting the negative impact of a threat, along with ownership of the response, to a third party • Involves payment of a risk premium to the party taking on the risk e.g. insurance, performance bonds, warranties, guarantees, etc. Plan Risk Responses –T &T www.testudaan.com 7/24/201740 Best PMP Exam Simulator
  41. 41. Strategies for Negative Risks Mitigate • It implies a reduction in the probability and / or impact of an adverse risk event to an acceptable threshold • ‘Transference’ is a form of mitigation e.g. adopting less complex processes, conducting more tests, or choosing a more stable supplier Sr.No. Strategy Example of Risk Risk Response 1 Avoid Obsoleteness of Product due to delay in launch Marketing analysis to ensure latest desired features in product 2 Transfer Penalties, expenses due to accidents. Labor head count increases long term liability Insurance Outsourcing 3 Mitigate Resource failure Contingency Plans, Backup resources, Redundancy Plan Risk Responses –T &T www.testudaan.com 7/24/201741 Best PMP Exam Simulator
  42. 42. Accept It is a strategy that is adopted because it is seldom possible to eliminate all risk from a project • It indicates that the project team :  Has decided not to change the project management plan to deal with risk OR  Is unable to identify any other suitable response strategy Active Acceptance most commonly involves establishing a contingency reserve, is to establish a contingency reserve, including amounts of time, money, or resources to handle the risks Passive Acceptance requires no action except to document the strategy, leaving the project team to deal with threats or opportunities as they occur and to periodically review the threat to ensure that it does not change significantly Strategies for Negative Risks Plan Risk Responses –T &T 7/24/201742 www.testudaan.com Best PMP Exam Simulator
  43. 43. Exploit • It seeks to eliminate the uncertainty associated with a particular upside risk by making the opportunity definitely happen • It may be selected for opportunities where the organization wishes to ensure that it is realized • It is analogous to‘Avoidance’ e.g. assigning more talented resources to the project to reduce time to completion OR to provide better quality than originally planned OR using new technologies OR technology upgrades to reduce cost and duration required to realize project objectives Share • It involves allocating some or all of the ownership of the opportunity to a third- party, who is best able to capture the opportunity for the benefit of the project • It is analogous to‘Transference’ e.g. forming risk-sharing partnerships OR joint ventures Strategies for Positive Risks Plan Risk Responses –T &T www.testudaan.com 7/24/201743 Best PMP Exam Simulator
  44. 44. Strategies for Positive Risks Enhance • It modifies the size of an opportunity to increase probability and / or positive impacts by reinforcing it’s trigger conditions • It is analogous to‘Mitigation’e.g. adding more resources to an activity to finish early Accept • Accepting an opportunity is being willing to take advantage of the opportunity if it arises, but not actively pursuing it . Sr.No. Strategy Example of Risk Risk Response 1 Exploit Availability of new technology enhances performance AcquireTechnology 2 Share Large contract needing lots of man- power, and end-to end responsibility Outsourcing Activities, Partnering with others having core competency 3 Enhance New government policy being formed, new tender being designed Make presentation to educate and influence into your own product specifications Plan Risk Responses –T &T www.testudaan.com 7/24/201744 Best PMP Exam Simulator
  45. 45. • Risk owners and assigned responsibilities • Agreed-upon response strategies • Specific actions to implement the chosen response strategy • Trigger conditions, symptoms, and warning signs of a risk occurrence • Budget and schedule activities required to implement the chosen responses • Contingency plans and triggers that call for their execution • Fallback plans for use as a reaction to a risk that has occurred and the primary response proves to be inadequate • Contingency reserves that are calculated based on the quantitative risk analysis of the project and the organization’s risk thresholds Risk register updates Plan Risk Responses – Output www.testudaan.com 7/24/201745 Best PMP Exam Simulator
  46. 46. Risk register updates Residual Risks • that are expected to remain after planned responses have been taken, as well as those that have been deliberately accepted Secondary risks • that arose as a direct outcome of implementing a risk response Plan Risk Responses – Output www.testudaan.com 7/24/201746 Best PMP Exam Simulator
  47. 47. Risk register updates 18. Risk triggers 19. Risk symptoms 20. Risk warnings 21. Risk response owners 22. Risk response strategy 23. Any specific actions to implement response strategy 24. Contingency plans for responses 25. Fall-back plans 26. Residual risk ? 27. Secondary risks ? 28. Contingency Reserves 29. Risk status 30. Remarks 18. Identified Risk 19. Root Cause 20. Potential Response 21. Category 22. Sub-Category 23. Prob. of Occurrence(%) 24. Impact on which of the project objective(s) ? 25. Impact (%) 26. Risk Raking (H/M/L) 27. Occurring in near term ? 28. Time to implement response for near term risk 29. Risk Urgency/Priority rating (H/M/L) 30. Probabilistic analysis of the project 31. Probability of achieving cost and time objectives 32. Prioritized list of quantified risks 33. Any trends observed ? 34. Expected MonetaryValue (EMV) Plan Risk Responses – Output www.testudaan.com 7/24/201747 Best PMP Exam Simulator
  48. 48. The process of (a) implementing risk response plans, (b) tracking identified risks, (c) monitoring residual risks, (d) identifying new risks and (e) evaluating risk process effectiveness throughout the project 11.6 Control Risk www.testudaan.com 7/24/201748 Best PMP Exam Simulator
  49. 49. Risk Reassessment • Determining if project assumptions are still valid • Determining if contingency reserves of cost or schedule should be modified in line with the project risks • Analysis may show that an assessed risk has changed or can be retired Risk Audits • Risk management policies and procedures are being followed • Updating the organizational process assets, including lessons learned databases and risk management templates for the benefit of future projects The Risk Response Owner reports periodically to the Project Manager on :  The effectiveness of the Risk Response Plan  Any unanticipated effects and  Any mid-course correction needed to appropriately handle risks Control Risks –T &T www.testudaan.com 7/24/201749 Best PMP Exam Simulator
  50. 50. Change Requests  Implementing contingency plans or workaround may result in a change request *Workaround: is a response to a threat that has occurred, for which a prior response had not been planned or was not effective Control Risks – Output www.testudaan.com 7/24/201750 Best PMP Exam Simulator
  51. 51. Thank you Saraca Solutions Pvt. Ltd. Best PMP Exam Simulator

×