Project Risk Management

© Mauro Jasse - All rights reserved (v1.0)
An outline for effective risk management in a project context
(in agreement with the PMBOK® Guide – Sixth Edition).
Project
Risk Management

2© Mauro Jasse - All rights reserved (v1.0)
What is Project Risk?
A potential event or condition, produced by one or multiple
causes, forecast to materialize and exert either a positive
(opportunity) or a negative (threat) effect on a project.
› Risk is omnipresent, exists at project
inception and continues to emerge
throughout the lifetime of a project.
› Even with careful planning, risks often
remain unknown, or are not recognized,
until after they occur (emergent risks).
› If materialized, a project threat
(potential future concern) becomes a
project issue (actual ongoing problem).
› Projects are continuously exposed to
risk, from conception until completion,
and it is impossible to eliminate them.

Individual project risk
A risk that exerts an effect on one or
more project objectives.
Overall project risk
The effect of uncertainty on the
project as a whole.
› Overall project risk results from all
sources of uncertainty, including
individual project risks.
Types of Project Risk
The risk appetite of the
organization and of project
stakeholders defines
thresholds of acceptable
levels of risk exposure.

“Poor risk management
practices” is a top reason why
projects fail to achieve their
goals on time and on budget.
› Scope creep
Continuous or uncontrolled changes to the scope of a project (list of deliverables
and the amount of work required to produce them) after the project initiates.
A Few Common Project Risks
› Inapt project manager
Project management responsibility assigned to an
individual who lacks the required education and
experience to effectively guide the project.
› Limited stakeholder engagement
Insufficient support from executive management
and a lack of commitment and involvement from
project stakeholders in general.

› Projects are vulnerable to countless risk
events and conditions and can benefit
from effective risk management efforts.
› Few aspects of project management are
more critical to project success than risk
management.
› Unmanaged risks can deviate a project
from its plan and keep it from achieving
its defined objectives.
› When risk is left unmanaged, project
success rates greatly decline.
Project Risk Management is
carried out to create and
protect value by exploiting
project opportunities and
minimizing project threats.
The systematic management
of risk in the scope of a project
to increase the probability of
successful project completion.
What is Project Risk Management?

Risk management employs
a framework and a series of
processes, in adherence to
a set of guiding principles.
› The risk management practice consists of
anticipating possible risks and treating them
before they are triggered.
› Risk management activity includes planning
the risk management approach, risk
identification, risk analysis, risk evaluation,
risk handling, and risk monitoring.
› The pertinence, design, and formality level
imposed on the risk management practice
matches characteristics of the target activity
(e.g., size, complexity, risk profile, strategic
importance, delivery approach, etc.)
The Risk Management Practice
Principles

Key Elements of the Risk Management Practice
Risk management activities
are carried out repeatedly
in a formal and controlled
manner.
Risk
Management
Framework
ProcessPrinciples
› Principles
Core values and foundational rules of
conduct that guide risk management
activities.
› Framework
Blueprint to conceive the risk management
practice and integrate it into the culture and
other processes across all functions.
› Processes
Systematic series of interrelated actions that
direct the execution of risk management
activities.

Risk Management Principles
02
All elements (i.e., framework,
principles, and processes) and
their interactions are suited to
the present needs and context
and aligned with the governing
strategy and defined objectives.
Tailored
01 050403
Value-oriented and contributes
to organizational enrichment
by enabling better-informed
decision-making processes,
improved performance, and
higher success rates.
Enriching
1009080706
Employs comprehensive and
standardized practices, which
are executed systematically to
ensure consistent, reliable,
measurable, and comparable
outcomes.
Structured
Seeks and relies on the best
available information from past
experiences, historical records,
stakeholder feedback, present
observations, expert
judgement, forecasts, etc.
Informed
Approach is continuously
reviewed and improved as a
result of academic research,
practical learning, acquired
knowledge, and cultivated
experiences.
Evolving
Involves all stakeholders to
enable deliberations and yield
decisions that are supported by
extensive knowledge, distinct
perceptions, diverse points of
view, and specific needs.
Inclusive
Practice is built to anticipate
risks, fallible human behavior,
cultural trends, and contextual
changes, and to adapt to such
occurrences in an appropriate
and timely manner.
Responsive
Publishes clear, accurate, and
timely information (on risk-
related initiatives, actions,
decisions, outcomes, etc.) that
is circulated to and directly
accessible by all stakeholders.
Transparent
Instructs and informs, facilitates
the learning of concepts, and
increases the overall awareness
of risk management and of its
associated benefits, among all
stakeholders.
Educational
Embedded into organizational
activities and processes,
including change management
and decision making, and is
formally a part of management
responsibilities.
Integrated

Risk Management Framework
Demonstrated formal commitment, by executive
groups, senior management, and control bodies,
to the risk management practice.
Engagement and Leadership
The risk management framework is conceived with
reference to the context (internal and external) of the
target activity and frequently reviewed and adapted
to address changing conditions.
Contextual Design
Continuous improvements made to the risk
management framework via iterative enhancements,
to evolve the risk management practice and maintain
its suitability to changing strategic objectives and
operational contexts.
Progressive Enhancement
A detailed (and custom) deployment blueprint
to direct the decisions and actions concerning
the conception and the integration of the risk
management practice.
Implementation Plan
Periodic assessments of the effectiveness of the
risk management practice by measuring its
performance and outcomes against the defined
purpose, plan, indicators, and expected results
Performance Evaluation
The incorporation of risk management concepts,
processes, and practices by the culture and other
processes across all functions, including the global
adoption of risk related roles and responsibilities.
Structural Integration
Engagement
and
Leadership

Carry out agreed-upon risk responses as
planned, to address overall project risk
exposure, minimize individual project
threats, and maximize individual project
opportunities.
Implement Risk Responses
Define how risk management activities
will be conducted in the project.
Plan Risk Management
Develop options, select strategies, and
agree on actions to respond to individual
project risks and address overall project
risk exposure.
Plan Risk Responses
Identify and document the characteristics
of individual project risks and of other
sources of uncertainty.
Identify Risks
Numerically analyze the combined effect of
individual project risks (and other sources of
uncertainty) on overall project objectives.
Perform Quantitative Risk Analysis
Prioritize individual project risks for further
analysis (or action) through the assessment
of their probability of occurrence, impact on
project objectives, and other characteristics.
Perform Qualitative Risk Analysis
Monitor the implementation of agreed-upon
risk response plans, track all identified risks,
identify and analyze new risks, evaluate
effectiveness of implemented responses, and
improve risk management performance.
Monitor Risks
PMI® Risk Management Processes

“Change for Better”
A Japanese-inspired notion
referring to activities for the
improvement of business
processes and functions
(one-time or continuously).
› Effectiveness of risk management practice
is periodically evaluated and improved to
adapt and suit the approach to evolving
business goals and operational context.
› Risk management processes regularly
assessed against a benchmark with
measurable improvements gradually
performed to address identified gaps.
Improving the Risk Management Practice
Kai Zen
“change” “good”
Continuous improvements are
carried out to ensure that risk
management continues to add
value to the organization.

› A tool to assess the maturity level of
the risk management practice as per
generally established best practices.
› Defines criteria through which the risk
management practice is evaluated.
› Supports the creation of a roadmap
with a set of actionable guidelines to
improve risk management capability.
› Progressions in maturity level result in
more consistent, predictable, and
reliable risk management processes.
LEVEL
5
OPTIMIZED
LEVEL
4
MANAGED
LEVEL
3
DEFINED
LEVEL
2
REPEATABLE
LEVEL
1
AD HOC
Highly predictable and measured outcomes,
and a change management process focused
on agility and continuous improvement.
Centralized planning and governance, fixed
performance metrics, formal communication,
and measurable improvement objectives.
Coordinated policy administration, with tools,
scalable processes, and controls consistent
across projects, programs, and portfolios.
Emergence of consistent risk management
tools, formal processes, and official roles with
clearly defined responsibilities.
Little or no risk management governance,
controls applied erratically, and generally
undefined roles and responsibilities.
LEVEL
0
ABSENT
Nonexistent risk management efforts and
artifacts.
Assessing Risk Management Capability
Risk Management Capability Maturity Model (CMM)

Essentials of Effective Risk Management
01 03 0502 04 06
Risk management
culturally embraced
and an integral part
of all other project
processes from the
conception phase,
including decisions.
Risk tolerance of the
organization and of
project stakeholders
clearly defined and
communicated and
project risk profiles
consistently defined.
Effective project and
risk management
software solutions,
with timely and
accurate data and
integrated into
enterprise systems.
Formal organization,
stakeholder support,
time commitment,
and embedded data
management
practices to leverage
information.
Management and
contingency reserves
devoted to triggered
risks, and time
reserves allocated to
absorb potential
schedule delays.
Evolving, agile, and
adaptable processes
that remain fit for
purpose in volatile
environments and
aligned with business
strategy and culture.

https://www.linkedin.com/in/maurojasse
MAURO JASSE
Project and Data Management Expert
About the Author
“A professional with over 15 years’ international
work experience in software development, IT
security, project management, business analysis,
and data management.”

Project Risk Management

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