The document provides information on project risk management processes and concepts. It discusses the seven processes of project risk management according to PMBOK, including plan risk management, identify risks, perform qualitative risk analysis, perform quantitative risk analysis, plan risk responses, implement risk responses, and monitor risks. It also covers key concepts such as different types of risks, risk thresholds, and considering stakeholder risk tolerance levels. Additionally, it provides an overview of uncertainty as a performance domain and describes what a tornado diagram is and how it can be used to determine the impact of various risks.

1. Project Management Professional
(PMP®)
Exam Preparation Course
Project Risk Management
Chapter No 11
A Guide to Project Management
Body of Knowledge - PMBOK® 6th Ed

2. Project Risk Management
Project Risk Management Processes
Process Name Process Group
1. Plan Risk Management
Planning
2. Identify Risks
3. Perform Qualitative Risk Analysis
3. Perform Quantitative Risk Analysis
5. Plan Risk Responses
6. Implement Risk Responses Executing
7. Monitor Risks Monitoring & Control

3. Project Risk Management
Exam Content Outline (ECO) 2021 Mapping
Domain No
& Name
Task No & Name Enabler No and Name
2. Process
3. Assess and Manage
Risks
2.3.1 Determine Risk Management
options.
2.3.2 Iteratively assess and prioritize
risks.

4. Project Risk Management
Exam Content Outline (ECO) 2021 Mapping
Domain No
& Name
Task No & Name Enabler No and Name
2. Process
15. Manage Project
Issues
2.15.1 Recognize when a risk
becomes an issue.
2.15.2 Attack the issue with the
optimal action to achieve project
success
2.15.3 Collaborate with relevant
stakeholders on the approach to
resolve the issues

5. Project Risk Management
Exam Content Outline (ECO) 2021 Mapping
Domain No
& Name
Task No & Name Enabler No and Name
1. People
7. Address and
remove impediments,
obstacles, and
blockers for the team
2.7.1 Determine critical impediments,
obstacles, and blockers for the team
2.7.2 Prioritize critical impediments,
obstacles, and blockers for the team
2.7.3 Use network to implement
solutions to remove impediments,
obstacles, and blockers for the team
2.7.4 Re-assess continually to ensure
impediments, obstacles, and blockers
for the team are being addressed

6. Project Risk Management
Key Concepts for Risk Management
 All projects will contain an element of risk. Whether this is a good
thing and an opportunity, or a bad thing and a threat to a
project, risk will occur.
 Risk exists at a couple of levels – first, at an individual level, and
then at an overall project level.
 Often, risk will impact several areas at once. So, even if it
constitutes an individual risk to your schedule, the domino effect
could impact other substantial constraints such as scope and cost.
 Overall project risk is the effect of

7. Project Risk Management
Key Concepts for Risk Management (cont.)
 Our job is to manage overall project risk and keep a project's
threat exposure level as low as we possibly can with the
information we have, and raise opportunity levels as high as we
can.
 In order to navigate risk effectively, the project team needs to
know what level of risk exposure is acceptable in pursuit of
the project objectives. This is defined by measurable risk
thresholds that reflect the risk appetite of the organization and
project stakeholders.
 Risk thresholds express the variation around an objective that
reflects the risk appetite of the organization and stakeholders.

8. Project Risk Management
Key Concepts for Risk Management (cont.)
 PMI's PMBOK® Guide – Sixth Edition includes “variability” and
“ambiguity” non-event risks to add a further layer of risk
identification and management.
 Variability risks include uncertainty about the critical characteristics
of a planned event or decision. (Acceptable defects 2 out of 100 samples
were documented in plan quality management, but during the inspection, we
found 5 defects). Variability risks can be addressed and managed using
Monte Carlo analysis.
 Ambiguity risks are looking toward the future of a project and
planning for those events that could undermine its results. (Maybe our
perfect technical solution will end up being imperfect. Regulations could
change mid-project and cause a do-over on planning and execution).
Ambiguity risks are a bit more exclusive to expanding our
understanding of those areas we aren't sure about.

9. Project Risk Management
Key Concepts for Risk Management (cont.)
 Business Risk is the investment that you could lose or the
potential to earn a return on that investment. Pure Risk is the
danger, the loss of life or limb. A pure risk has no positive
opportunity.
 Known/unknown risk events, meaning that we know it could
happen, there is a probability attached, and if it does happen,
then the impact is mostly unknown.
 Unknowable-unknowns / emergent are risks that can only be
recognized after they have occurred. These can be tackled through
developing project resilience.
 If our project is impacting the program or portfolio, then
integrated risk management is necessary as well.

10. Project Risk Management
Key Concepts for Risk Management (cont.)
 The other thing to consider is that project stakeholders have a
variety of risk tolerance levels. (risk-takers,, risk-averse, risk-
neutral). The stakeholder's tolerance levels could change during
the project, depending on what is happening.
 It is best to get everyone on the same page when it comes to
classifying risks.
 The great thing about Agile projects is you are never more than a
month into them. (Sprint length – 4 weeks). Risk is considered
when selecting the content for each iteration / sprint, and risks
will also be identified, analyzed, and managed during each iteration.
Backlog items may be reprioritized as the project progresses,
based on an improved understanding of current risk exposure.

11. Performance Domain - Uncertainty
Overview
 Uncertainty is a lack of understanding and awareness of issues,
events, paths to follow, or solutions to pursue.
 Uncertainty presents threats and opportunities that project teams
explore, assess, and decide how to handle.
 Ambiguity is a state of being unclear, having difficulty in identifying
the cause of events, or having multiple options from which to choose.
 Complexity is a characteristic of a program or project or its
environment that is difficult to manage due to human behavior, system
behavior, and ambiguity.
 Volatility is the possibility for rapid and unpredictable change.
 Risk is an uncertain event or condition that, if it occurs, has a positive
or negative effect on one or more project objectives.

12. Performance Domain - Uncertainty
Overview (cont.)
 This performance domain addresses activities and functions
associated with risk and uncertainty.
 Effective execution of performance domain results in the following
desired outcomes:
An awareness of the environment in which projects occur (technical,
social, political, market, economic environments etc.).
Proactively exploring and responding to uncertainty.
An awareness of the interdependencies of multiple variables on the
project.
The capacity to anticipate threats and opportunities and understand
the consequences of issues.

13. Performance Domain - Uncertainty
Overview (cont.)
Effective execution of performance domain results in the following
desired outcomes: (cont.)
Project delivery with little or no negative impact from unforeseen
events of conditions.
Opportunities are realized to improve project performance and
outcomes.
Cost and schedule reserves are utilized effectively to maintain
alignment with project objectives.
 Aspects of the

14. Tornado Diagram
 A Tornado diagram is a bar chart that helps project managers with the
sensitivity analysis to determine the impact of various risks on a
project with regards to their positive or negative impact.
 This is placed in descending order so that the project manager can take
decisions on the high impact items first.
 In your project you might need to take advantage of a new
opportunity or if your project needs to recover a late deliverable or
reduce overspending it might be worthwhile taking a risk in order to be
successful.
 For example, this might be purchasing and implementing new software or
a new piece of equipment for your project that was not available when the
project began.

15. Tornado Diagram
In this Tornado diagram, there
are positive and negative results
for each risk.
Risk A has the potential to save
the project $80,000 and a
possibility of losing $40,000.
This makes Risk A the most
sensitive because the outcome
is highly variable.