Basic knowledge about project risk and risk management

2016/7/2 (C) 2016 MORIWAKI Yuichi All rights reserved. 1
Project Risk Management
Chapter 1 – Identifying Risks
Yuichi MORIWAKI

Chapter 1
Identifying Risks

Section 1: Inside Risk

A Project Risk
A project risk
• A project risk is a thing or a matter which bothers the project completion.
o In a software development there are some major processes like “Requirement Analysis”, “Specification
Definition”, “Software Design”, “Coding, Debugging, Testing” and “Joint Testing”…. If any of those
processes are bothered, it makes some harmful effects on entire project.

A Risk & a Risk factor
A risk and a risk factor
• When we consider about eliminating a risk, we need to clarify if the thing or the matter is “a risk” or “a risk
factor”. We can’t directly remove a risk, but we can remove a risk factor instead.
Risk: breaking a window pane
Risk factor: a ball
Risk factor: a hitter
Risk factor: a Baseball game
Risk factor: a bat
As you can see, as far as we are playing baseball, we can’t remove the risk of breaking a window pane.
But if we can remove one of those risk factors, we can remove the risk of breaking a window pane.
So the correct recognition of risk and risk factor is very important. And by the correct identification of risk
factor, we can think of risk mitigation.

• Consider if we are asked to carry a cargo from Princeton Univ. to Brown Univ in 10 hours, what will be the risk and what
will be the risk factor?
• What are the risk factors?
Princeton Univ.
Brown Univ.

• If we can identify the risk factors, it is easy to consider about the risk. This is the risk analysis.
Risk Factor Possible Risk Possible Result
of Risk
Necessary
preparation
Feasibility of
preparation
Consideration on schedule planning
Truck Engine broke down Delivery failure Prepare another truck Too costly. Not
feasible
If broke down happens, it may take 3 hours to
prepare alternative truck , take 30 minutes on
transshipment.
Run out of gas Large delay in
delivery
Check before start
Bring reserved gasoline
Feasible Check before start is enough.
To ensure it check previous night will be enough.
Flat tire Medium delay in
delivery
Check before start
Check the availability of
spare tire
Drill tire changing
Feasible
Takes time for
training
Assuming possible occurrence of puncture is once,
then consideration on schedule will be maximum
one hour.
People who has no experience about transport of cargos, it may be difficult to complete this sheet. But people who has a lot of experience, can consider more
about risks, necessary preparations and other points. If someone who has the long distance driving experience, he/she may give us more precise risks.

• What sort of risk does this risk factor have?
Risk Factor Possible Risk Possible Result
of Risk
Necessary
preparation
Feasibility of
preparation
Consideration on schedule planning
Route

Summary until this slide
A project risk
• What we have learned about a risk here is;
1. We can’t remove a risk directly
2. To avoid a risk, we need to remove the risk factor.
3. It is very easy to find risk factors if people have experience on a certain activity.
(It may be difficult to find if people have less experience. )
4. Risk analysis in general is to consider about risk factor, possible risk, possible result of risk, necessary
preparation, feasibility of preparation and consideration on schedule planning
Those risk factors are almost fixed and constant on a casual business activity.
When considering about transporting cargos, a truck, cartons, drivers, route are mandatory. Those risk
analysis can be almost standardized.
The reason why those can be standardized is as those activities can be completed by the team only. The
activity doesn’t involve other parties.
The risks come from a company or a team, we call it “Inside Risk”.

Section 2: Task dependent risk

A Risk due to task dependency
If two teams need to collaborate to accomplish a work. There will be a dependency risk.
Process A Process B
Process B needs to wait until the completion of
process A
Case #1
Process A
Process B
Process B needs to wait for the start of process A.
And also process B needs to wait for the closure of
process A to close B itself.
Process B has a large dependency on A.
Case #2
C
Process B
In some cases, independent process C may
interrupt process B.Case #3
B
B
Serial dependency risk
Parallel dependency risk
External Accident risk

How we can find the dependency risk?
To find the dependency risk, we need to break down the high level process definition to details.
Preparation of omelet
“Preparation of omelet” is more
concrete than “Breakfast
preparation”.
We can see what exactly need to
prepare.
But still the dependency risk is
not unclear to us.
Why Breakdown?
Food preparation
Breakfast
Preparation
“Food Preparation” is one of
the highest level of process
definition.
The objective is very clear,
and it us a clear goal.
But we can’t see what to
prepare, when to prepare. “Breakfast Preparation” is
one of the example of high
level process definition.
You can find what to
prepare, when to prepare.
But we can’t see the
dependency risk. We need
more breakdown on this.

Process break down.
The purpose of break down is to find the disturbance of process.
If the process is broken down to cooking procedures, it’s much easier to find the disturbance. If you can identify
the disturbances, we can make the risk elimination plan.
Prepare eggs
Break eggs
add salt
Mix well
Heat the pan
Fry at weak
head level
Serve on a
plate
If the eggs are too old?
Enough eggs for 5
people?
If the bowl is too
small?
Salt is available?
If the size is OK?
Butter is prepared?
Oven works well? If the serving plate is
ready and clean?
Check the expire
date and available
number every day.
Define maximum size
of omelet and
prepare a bowl for it.
Define maximum
size of omelet and
prepare a pan for it.
Check the condition
of oven every night
Check the washing
machine and the stock
of detergent everyday.
Those are the risks
which will disturb
making omelet
Those are the processes
which have dependency
on the preceding process.
If preceding process is
stopped, you can never
get the omelet.
So each process will be
the risk factor, the risk is
the disturbance of each
process.
These are the risk
preventive actions.
Necessary manuals,
documents, trainings
will be made from
them
If we break down the
preparation of omelet more
into recipe level, we can see
the risk and risk factor.

Prepare eggs
Break eggs
add salt
Mix well
Heat the pan
Fry at weak
head level
Serve on a
plate
On what process, external accidental risk may arise?

Risk
• What sort of risk does this risk factor have?
High level Process Process
breakdown
Identified risk on this
process
Preventive actions Feasibility of preventive
actions
Consideration on
inevitable risks
Prepare eggs If the eggs are too old?
Enough eggs for 5 people?
Check the expire date and available
number every day
Easy to implement by adding this
action as daily checking
Break eggs and add
salt
If the bowl is too small?
Salt is available?
Define maximum size of omelet and
prepare a bowl for it.
Once it is fixed, no risk will raise
up.
Mix it well Breakage of beater may
happen
Give instruction of handling beater to
avoid the breakage
Easy to implement.
Even if the breakage happens,
easy to find alternative way.
Heat a frying pan If the size is OK?
Butter is prepared?
Define maximum size of omelet and
prepare a pan for it.
Once it is fixed, no risk will raise
up.
Fry at weak heat
level
Break down of oven may
happen
Check the condition of oven every
night
Sudden Power failure may
happen
Prepare the backup power supply like
self power generation system
Not feasible. To tell customer we are not able to
deliver. And propose alternative
dish menu.
Serve on a plate If the serving plate is ready
and clean?
Check the washing machine and the
stock of detergent everyday.

Section 3: Outside risk

A Risk from outside
Dependency is not only within inside activity. Dependency has various cases including inside and outside tasks.
Weather is the typical outside risk factor from the view point of picnicking.
Risk: cancellation of picnicRisk factor: Weather

High level Process Process
breakdown
Identified risk on this
process
Preventive actions Feasibility of preventive
actions
Consideration on
inevitable risks
A Risk from outside
Let’s consider about the task to transporting a cargo from Princeton Univ. to Brown Univ.

A Break
End of Chapter 1

Chapter 2
Managing Risks

Section 1: Scope of risk management

Managing risks
•We have learned about the risk and risk factor in the previous chapter, so on the risk management activity what do we
have to manage?
On risk management, what we have to manage is a Risk factor
If we try to manage only risk itself, our risk management activity
will be always “delayed”.
Because, the most important point on risk management is
“prediction”. If you work with risk, that means the risk is already
arisen. That activity is the supportive action to the arisen risk. It
requires time & money to solve. From the project management
point of view, those time and money should be minimized.
A fire is a risk, oil and matches or lighter will be the risk factor. If
we can avoid a fire, we don’t lose our time, money and property.
We need to recognize the management is to avoid the occurrence
of a fire, so what we have to manage is the risk factor.
and
If there happens a fire, we need to extinguish. The entire activity
to put it down as soon as possible is the management of risk.

Managing risks
•What we want to do against risk is;
To make it not to happen
Risk
To minimize the impact of risk.
To detour
To predict the occurrence
To include it in the project plan
To prepare countermeasure against its occurrence
Risk factor analysis
Risk analysis
Mostly for risk prevention
Mostly for risk impact mitigation
- Removal of risk factor (Before project start or
during the project).
- Add considerable task on project plan.
- Monitor risk factor to see unexpected behavior
of internal & external risk factors.
- Take necessary action for the risk factor when
some signs or bodement are seen.
- Prepare procedure for the risk occurrence.
- Add necessary consideration for the counter action
of risk occurrence on project plan.
- Catch the occurrence & immediate address.
- Proceed the project by minimizing or
removing the risk. (including detouring)
- Detour the risk and proceed the project.
- Hold the process or freeze the project until the risk
is solved.
Preventive action against the occurrence of risk:
Counter action against the occurrence:
Scope of risk management
The counter action may include some part of project management. But the role of risk
management is to give correct information to let the project manager chosen the correct action.

Section 1: Managing Risks

Managing risks
Risk management starts before project start.
the necessary task should be included in the project plan.
Before project start
- Analyze risk and risk factor
- Remove risk factor
- Add necessary consideration on project plan
- Protect by contract
- Define what to monitor
- Define how to watch risk factor
- Define the communication line & escalation path
- Prepare procedure for the risk occurrence
- Monitor internal & external risk factors
- Take necessary action on the risk factor
- Catch the occurrence
- Take necessary & immediate action
- Give proper info to determine
Solve the issue and proceed the project
Detour the risk and proceed the project.
Hold the process
Freeze the project
After project start
Risk factor analysis
Risk analysis
Mostly for risk prevention
Mostly for risk impact mitigation
- Removal of risk factor (Before project start or
during the project).
- Add considerable task on project plan.
- Monitor risk factor to see unexpected behavior
of internal & external risk factors.
- Take necessary action for the risk factor when
some signs or bodement are seen.
- Prepare procedure for the risk occurrence.
- Add necessary consideration for the counter action
of risk occurrence on project plan.
- Catch the occurrence & immediate address.
- Proceed the project by minimizing or
removing the risk. (including detouring)
- Detour the risk and proceed the project.
- Hold the process or freeze the project until the risk
is solved.
Preventive action against the occurrence of risk:
Counter action against the occurrence:
Scope of risk management
Risk management task

Managing risks
Before the project starts or during the project, the most important point on risk management is prediction,
“Before risk occurs”.
To remove the risk,
Risk Management needs to manage
the cigarette lighter and the oil in a
proper manner.
Store those with a distance.
Keep the oil under cooler place.
Keep the cigarette lighter in a safe
place. (reach out of kids)
Completely remove them.
The risk of a fire
To remove the risk,
Risk management needs to keep on
watching them. How they are used,
how they stored back to the original
place.
Check who uses them
Check the location
Check the store place to be
returned.
Check the leakage of oil from the
can
Check the environmental
temperature
Check if there are a fire near the
storage place
To extinguish the fire before it
expands, prepare a bucket of water,
immediately address to the place
and extinguish.
Risk management duty is;
Keep monitoring if there are a fire.
Inform the project team if it occurs.
Risk management previously can;
Define the place to monitor
Define the procedure of water
preparation
Define the communication line
Define the report format
To extinguish the fire
Call fire fighter, stop working,
escape from the danger, evacuate
the place, follow the instruction of
fire fighter.
Risk management duty is analyze
the impact and inform the project
team to let them prepare a revised
plan.
Risk management previously can;
Define the emergency manual
Define the procedure of a
0 Risk = No impact 0 Risk = No impact
Small impact by occurred
risk
Large impact to project activity
Before project start After project started

Managing risks
In our specification definition activity, what are the risk and risk factor?
Risk factor

Managing risks
Successful risk management activity is;
To take necessary
preventive action against
risk factors
To monitor external &
internal risk factor
To predict risk occurrence To take preventive
immediate action against
risk occurrence
To analyze the risk and
risk factor
Analyze Isolate Monitor Predict Prevent

End of the entire Chapter

Basic knowledge about project risk and risk management

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