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SPM-UNIT III
RISK MANAGEMENT
Prof. Kanchana Devi
Introduction
 An uncertain event or condition that, if it
occurs, has a positive or negative effect on a
project’s object...
The key elements of risk
Prof. Kanchana Devi
3
 It relates to future
 Cost underestimation, New Technology difficult to
...
Socio-technical Model of Risk
Prof. Kanchana Devi
4
 Kalle Lyytinen and his Colleagues proposed a
diagrammatic representa...
Risk Framework
Prof. Kanchana Devi
5
 Actors : refers to all the people involved in the
development of the application in...
……
Prof. Kanchana Devi
6
 Structure: Describes the management
structures and systems including those
affecting planning a...
A framework for dealing with Risk
Prof. Kanchana Devi
7
 Planning for risk includes
 Risk Identification
 Risk Analysis...
Risk Identification
Prof. Kanchana Devi
8
 There are two main approaches:
 Checklists
 Brain-stroming
Checklists
Prof. Kanchana Devi
9
 Checklists are simply lists of the risks that
have been found to occur regularly in sof...
Brainstorming
Prof. Kanchana Devi
10
 Stakeholders are brought together, preliminary
and plans are drafted
 Identifying ...
Risk Assessment
Prof. Kanchana Devi
11
 A common problem in risk identification is that
a list of risks is potentially en...
Example: Problem
Prof. Kanchana Devi
12
 A project depended on a data centre
vulnerable to fire. It might be estimated th...
Solution:
Prof. Kanchana Devi
13
 By using the formula:
 Risk Exposure= $500,000*0.001
= $500
Risk Exposure = (Potential...
Risk Exposure Assessment
Prof. Kanchana Devi
14
Ref Hazard Likelihood Impact Risk
R1 Changes to Requirement Specification
...
Risk Probability and Associated
range values
Prof. Kanchana Devi
15
Probability Level Range
High Greater than 50% Chance o...
Impact Matrix
Prof. Kanchana Devi
16
R6 R1
R2,R3,R5
R4
High
Significant
Moderate
Low
Low Moderate Significant High
Probabi...
Risk Planning
Prof. Kanchana Devi
17
 After identifying the risks and priorities
 Task is to deal with them
 Risk Accep...
Risk Management
Prof. Kanchana Devi
18
 Eg: Staff absence through illness.
 “Contingency Plan”
Risk Reduction Actions
Prof. Kanchana Devi
19
 The risk reduction action can be assessed by
calculating the “Risk Reducti...
Example:
Prof. Kanchana Devi
20
 An unrealistic example, it might cost $200,000
to replace a hardware configuration used ...
Solution:
Prof. Kanchana Devi
21
 RRL = (2000-1000)/500
= 2.0
=>So the action taken is worthwhile.
Risk Register
Prof. Kanchana Devi
22
Risk Record
Risk Description
Impact Description
Recommended Risk Mitigation
Probabili...
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Spm unit iii-risk-intro

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Risk Management Introduction

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Spm unit iii-risk-intro

  1. 1. SPM-UNIT III RISK MANAGEMENT Prof. Kanchana Devi
  2. 2. Introduction  An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.  PRINCE2:  The Chance of exposure to the adverse consequences of future events 2 Prof. Kanchana Devi PRINCE PRojects IN Controlled Environment
  3. 3. The key elements of risk Prof. Kanchana Devi 3  It relates to future  Cost underestimation, New Technology difficult to work.  It involves cause and effect  Cost Over-run, Use of untrained staff, Poor Specification
  4. 4. Socio-technical Model of Risk Prof. Kanchana Devi 4  Kalle Lyytinen and his Colleagues proposed a diagrammatic representation Actors TechnologyStructure Tasks
  5. 5. Risk Framework Prof. Kanchana Devi 5  Actors : refers to all the people involved in the development of the application in the question  Risk: High staff turn-over  Technology: encompasses both the technology used to implement the application and that embedded in the delivered products  Risk: Appropriateness of the technologies and possible faults within them
  6. 6. …… Prof. Kanchana Devi 6  Structure: Describes the management structures and systems including those affecting planning and control.  Risk: Some implementation might need user participation in some tasks(not allotted)  Tasks: relates to the work planned  Risk: Complexity of work might lead to delay
  7. 7. A framework for dealing with Risk Prof. Kanchana Devi 7  Planning for risk includes  Risk Identification  Risk Analysis and Prioritization  Risk Planning  Risk Monitoring
  8. 8. Risk Identification Prof. Kanchana Devi 8  There are two main approaches:  Checklists  Brain-stroming
  9. 9. Checklists Prof. Kanchana Devi 9  Checklists are simply lists of the risks that have been found to occur regularly in software development projects. Risk Risk Reduction Techniques Personnel shortfalls Staffing with top talent, job matching, team building, training and career development… Unrealistic time and Cost Estimates Multiple Estimation techniques, Design to cost, Incremental development… Developing the wrong software functions Improved software evaluation, Formal Specification Methods… Developing the wrong user interface Prototyping, Task Analysis, User Involvement. Gold Plating Requirements Scrubbing, Prototyping, Cost-benefit analysis…
  10. 10. Brainstorming Prof. Kanchana Devi 10  Stakeholders are brought together, preliminary and plans are drafted  Identifying the solution using the individual knowledge.
  11. 11. Risk Assessment Prof. Kanchana Devi 11  A common problem in risk identification is that a list of risks is potentially endless.  Estimating the risk exposure for each risk using the formula: Risk Exposure = (Potential Damage)* (Probability of Occurrence)
  12. 12. Example: Problem Prof. Kanchana Devi 12  A project depended on a data centre vulnerable to fire. It might be estimated that if a fire occurred a new computer configuration could be established for $500,000. It might also be estimated that a computer is located there is a 1 in 1000 chance of a fire actually happening, that is a probability of 0.001.
  13. 13. Solution: Prof. Kanchana Devi 13  By using the formula:  Risk Exposure= $500,000*0.001 = $500 Risk Exposure = (Potential Damage)* (Probability of Occurrence)
  14. 14. Risk Exposure Assessment Prof. Kanchana Devi 14 Ref Hazard Likelihood Impact Risk R1 Changes to Requirement Specification during coding 8 8 64 R2 Specification Task longer than expected 3 7 21 R3 Significant staff sickness affecting critical path activities 5 7 35 R4 Significant staff sickness affecting non- critical path activities 10 3 30 R5 Module coding takes longer than expected 4 5 20 R6 Module testing demonstrates errors or deficiencies in design 4 8 32 H S M S H S
  15. 15. Risk Probability and Associated range values Prof. Kanchana Devi 15 Probability Level Range High Greater than 50% Chance of happening Significant 30-50% Chance of happening Moderate 10-29% Chance of happening Low Less than 10% Chance of happening Impact on Cost and Associated range values Probability Level Range High More than 30% above Budgeted Expenditure Significant 20 to 29% above Budgeted Expenditure Moderate 10 to 19% above Budgeted Expenditure Low Within 10% of Budgeted Expenditure
  16. 16. Impact Matrix Prof. Kanchana Devi 16 R6 R1 R2,R3,R5 R4 High Significant Moderate Low Low Moderate Significant High Probability Tolerance Line
  17. 17. Risk Planning Prof. Kanchana Devi 17  After identifying the risks and priorities  Task is to deal with them  Risk Acceptance  Risk Avoidance  Risk Reduction & Mitigation  Risk Transfer
  18. 18. Risk Management Prof. Kanchana Devi 18  Eg: Staff absence through illness.  “Contingency Plan”
  19. 19. Risk Reduction Actions Prof. Kanchana Devi 19  The risk reduction action can be assessed by calculating the “Risk Reduction Leverage”(RRL)  RE  Risk Exposure  If RRL = 1.00 indicates the reduction in the exposure is greater than its cost RRL= (RE before-RE after)/(Cost of risk reduction)
  20. 20. Example: Prof. Kanchana Devi 20  An unrealistic example, it might cost $200,000 to replace a hardware configuration used to develop a software application. There is a 1% chance of fire. The risk exposure would be 1% of $200000, that is $2000. Installing fire alarms at a cost of $500 would reduce the chance of fire to 0.5%. The new risk exposure would be $1000, a reduction of $1000 on previous exposure. Calculate the RRL.
  21. 21. Solution: Prof. Kanchana Devi 21  RRL = (2000-1000)/500 = 2.0 =>So the action taken is worthwhile.
  22. 22. Risk Register Prof. Kanchana Devi 22 Risk Record Risk Description Impact Description Recommended Risk Mitigation Probability/ Impact Values Incident/Action History Risk Id Risk Title Owner Date Raised Status Probability Impact Cost Duration Quality Pre-mitigation Post-mitigation Date Incident/Action Actor Outcome/Comment

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