Overview• Number of elements that risks can impact – Project risks – Business risks – Technical risks• There are a number of strategies with which to handle risk: – Proactive – Reactive – Mitigation
Proactive risk management• Eliminating root causes of a risk to ensure it doesnt happen. – Identify and eliminate factors causing risk – Identify and prevent risks to stop them becoming problems
Risk Mitigation• Reacting to situations after they have become risks – Fix on failure – Crisis management Reactive Risk Management• Resource planning for risks IF they occur
Risk Management Process Plan the risk management1 approach Risk Mgt Plan2 Identify risks Risk Register3 Assess risks4 Plan Risk Responses Carry out risk reduction Project Obj’s Achieved5 actions
Risks & Planning Planning People Review ManagementPeople are key throughout the process
Assess Risk • What is the likelihood? • What is the impact? Likelihood High Low HighImpact Low
Risk ExposureRisk Probability Size of theExposure of loss unexpected Assessing the size of loss loss - Breakdown loss into smaller Assessing probability Of losses. Then estimate the Unexpected Loss smaller chunks, and - Delphi or group consensus aggregate together. - Project or system guru - So a server goes down, the opinion loss is not only the cost of the server, but the cost of the lost productivity etc.
Risk responses• Acceptance – Let the risk happen, countermeasures are too costly.• Avoidance/ prevention – Try to stop it happening• Mitigation/ reduction – Reduce the impact if it happens• Transfer – Take out insurance, get someone else to take the burden
What is a risk register• List of risks• Their impact• Probability of it happening
Points• Risk process is cyclical• Risks need to be constantly reassessed• The nature of risks may change as a project goes on
Questions• What is proactive risk management?• What is reactive risk management?• What is risk mitigation?• Describe the risk management process• How do you assess a risk?• What is the formula for risk exposure?• How do you assess the size of a loss? Or the probability of a risk?• Think of 3 risks for a project (implementing a new stock management system to Tesco’s). Add them to a risk register.