Risk identification checklists can be helpful when identifying potential risk areas. A template is designed to help you determine whether there are inherent risks to your project. The results should be used as guidelines, since there will be other factors that may lower or raise the risk level. For instance, you may have a large project, which implies higher risk. This risk could be reduced if you also have an experienced project manager. Depending on where your project characteristics fall, you can evaluate whether your risk is high, medium, or low. If your project has many high-risk characteristics, it does not mean you will not be successful. However, it does mean that you should put a plan into place to manage the risk.

1. Risk Analysis &
Management
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2. Why Risk Analysis
• Develop registry of known causes of poor performance
• Aid decision making (project direction, scheduling and budget)
• Identify KPIs for project monitoring and status reporting
• Identify proactive actions
• Avoid crisis management
• Comply with auditing requirements
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3. Common Addressed
Heuristics
– Rules of thumb
– Intuition
– Guesstimates
– Common sense
Cognition
- Project current good/bad outcomes
too far in future
Optimism
- Being overly optimistic for planned
actions
Fear and Doubt
- Disseminating negative
(dis)information for project credibility
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4. Risk Analysis vs. Risk Management
• Risk Analysis
Systematic study
• Risk Management
Active process
• Assess risks
• Communicate risks
• Manage risks
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Project’s Strategic Objectives
Risk Analysis
Risk Reporting
Threats and Opportunities
Decision
Risk Management
Risk Reporting
Monitoring
Risk Identification
Qualitative
Risk Estimation
Quantitative
Risk Evaluation

5. Risk Factors
• Events and conditions that drive uncertainty in project
– Favorable (Opportunities)
– Unfavorable (Negative Risk)
• Key factors
– Common risk factors checklists
– Often unique to a project
– Not derivable from historical information
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6. Quality and Quantity Risk Analysis
• Quality
Identify
– Potential risks
– Vulnerable resources and assets
• Quantity
Arithmetic score
– Probability
– Impact
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7. Risk Score
Probability
(0-1)
Impact on Project (0-100)
Low (10) Medium (50) High (100)
High (1.0) Low (10) Medium (50) High (100)
Medium (0.5) Low (5) Medium (25) Medium (50)
Low (0.1) Low (1) Low (5) Low (10)
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• Risk Contingency
The less risk project is willing , the more contingency
– P80 – risk adverse (suggested)
– P50 – risk neutral
– P30 – risk seeking

8. HowTo
• Risk Factor Checklists
– Identify Risk Factors
– Suggest Management activities
• Risk Simulation (What-if)
– Complex relationships in a system with multiple steps (manufacturing, budgeting)
• Monte Carlo
– Significant uncertainties in many parameters (economics, sales)
• Step 1: Create a parametric model, y = f(x1, x2, ..., xq).
• Step 2: Generate a set of random inputs, xi1, xi2, ..., xiq.
• Step 3: Evaluate the model and store the results as yi.
• Step 4: Repeat steps 2 and 3 for i = 1 to N.
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9. Project Risk Factors
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10. Characteristics Low risk Medium risk High risk
The business benefit of the project is:  Well defined   Poorly defined
The scope of the project is:  Well defined   Poorly defined
The project sponsor is:  Identified, committed, and enthusiastic   Not identified or not enthusiastic
The business customer commitment level is:  Passionate and enthusiastic   Passive and hard to engage
The project manager has:  Similar experience on multiple projects   Little experience on similar projects
The project team is:  Located together   Dispersed at multiple sites
Project management processes and procedures are:  Familiar and will be utilized   Not familiar and will not be utilized
The business requirements of the project are:  Understood and straightforward   Very vague or very complex
The system availability requirements include:  Windows of availability and downtime   Availability on a 24/7 basis
The technical requirements are:  Similar to others in the company   New and complex
The data requirements are:  Simple   Complex
The number of locations to deploy to is:  One   More than four
The number of system interfaces are:  One or none   More than five
The number of organizations this will affect is:  One or two   More than five
The total estimated effort hours are:  Fewer than 1,000   Greater than 5,000
The total estimated project duration is:  Fewer than three months   Longer than one year
The subject matter is:  Well known by the project team   Not well known by the project team
The project is dependent on:  Zero or one outside project or team   Three or more outside teams or projects
Business processes, procedures, policies require:  Little or no change   Substantial change
Changes to the organizational structure require:  Little or no change   Substantial change
The technology being utilized consists of:  Existing software, hardware, languages, databases, and tools   New software, hardware, languages, databases, or tools (or new releases)
The quality of current data is:  Well defined and simple to convert   Poor or complex to convert
If a package implementation:
 No (or minimal) customization is needed
 The product or release is stable
 The vendor is familiar in this market


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 Heavy customization is needed
 The product or release is new to the market
 The vendor is new to this market
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