Sameer Mitter Bournemouth is a skilled IT professional at JP Morgan. He better know about Project Risk Management and explains here.

1. Slide 1 -
PG
Understand Risk management to
Handle a Project
By Sameer Mitter

2. Slide 2 -
AGENDA
1. Introduction
2. Project Risk Management
3. Project Risk Register
4. Contingency Plan

3. Slide 3 -
Risk Management means
identification as early as
possible!
1. Introduction
Shark or Dolphin?
Risk = probability [%] * extent of damage [time, money]

4. Slide 4 -
►Risk Management is aiming at risk minimization and
mitigation
►Risk Analysis:
► Structured Process to identify possible hazards to the
project
► Integral part of any project planning and decision
process in the oil industry
►Risk Mitigation: avoid, insure, move (hand over), accept
►Risk Management provides for plans and resources in
case a project risk materializes
►Risk Assessment and mitigation (re-)planning is a
continuous, i.e. frequently repeated process
1. Introduction

5. Slide 5 -
Project Plan
Cost Risk Schedule Risk Content Risk
Preventive Planning Corrective Planning
1. Introduction

6. Slide 6 -
Preventive Action:
►is initiated before damage occurs or as preparation for
damage
►is immediately integrated into the plans
►reduces the probability that a damage will appear
Corrective Action:
►Is a planned solution which is available for
emergencies
►reduces the extent (cost) of damage
1. Introduction

7. Slide 7 -
Doesn’t matter:
Hope for Dolphin but be prepared for shark!!!
Advertisement of Ernst & Young, FAZ 4.11.1999
Again: Shark or Dolphin?
1. Introduction

8. Slide 8 -
Risk management is fundamental to project management
and has an impact on estimates of time and effort required for
the project. It is concerned with assessing the kinds of risk
associated with trying to make something happen, for
example the possibility of delays in the schedule caused
through staff sickness or materials not being available at the
appropriate time. Risks in a project can be both internal –
arising from within the project – and external – arising from
the context or environment of the project.
Project Risk Management, describes the processes
concerned with conducting risk management on a project. It
consists of the Risk Management Planning, Risk
Identification, Qualitative Risk Analysis, Quantitative Risk
Analysis, Risk Response Planning, and Risk Monitoring and
Control project management processes.
2. Project Risk Management

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2. Project Risk Management

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On some projects it may be appropriate to hold regular Risk
Management meetings.
The following are seen as the key stages:
►during feasibility studies,
►just before or at the early stages of FEED,
►just before or at the early stages of detailed engineering,
►just before or at the early stages of construction,
►few months prior to shut-downs,
►when setting business performance contracts,
►before partner or major project review meetings,
►as part of regular meetings with contractors/vendors,
►generally at the commencement of each major phase of a
project.
2. Project Risk Management

11. Slide 11 -
Risk Allocation
The primary principle is to allocate the risk to the people
best able to control the risk.
The major considerations being:
►ability to control, bear, or provide contingencies for the
risk when it occurs,
►ability to control the events leading to the risk,
►fit with corporate objectives, image, and risk taking
aversion levels,
►safety to environment life and health,
►exposure levels to profitability and loss,
►the timing of commitments,
2. Project Risk Management

12. Slide 12 -
2. Project Risk Management
►novelty or repeatability of the risks to be taken,
►the legal and moral position,
►the effects on the decision makers (authorities,
responsibilities, competencies, morale)
►the consent of the people to whom the risk applies.
To allocate a risk that cannot be controlled means that a
project has really retained the risk, but may have lost the
opportunity to control it. Risk and responsibility are inevitably
related.

13. Slide 13 -

14. Slide 14 -
The project will conduct a Risk Workshop that will identify
potential risk to delivering a successful project from all
aspects (technical, commercial, economic, operational or
political with HSEQ aspects as an integrated consideration
in each). Based on this, the project will determine potential
mitigation options and test the robustness of the project to
what is assessed to be the residual risk faced by the
project.
Based on the outcome of the Risk Workshop, the Project
Team will prepare a Project Risk Register.
3. Project Risk Register

15. Slide 15 -
The risk register will:
►categorise and list each identified risk
►assign a timing to describe which stage of the project
each risk will be active
►identify the actions by the Project Team to mitigate
each risk
►identify the project team member responsible for
managing each mitigation plan item
The Risk Register will be kept under regular (monthly)
review by the Project Team and updated to reflect the
changing circumstances either in the project or in the
environment within which the project is being developed.
Risks will be added or eliminated resulting from such
reviews and the risk mitigation plan will be updated to
respond to the currently and forecasted identified risk
picture.
3. Project Risk Register

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The contents of a risk register can then be used to:
► identify and record risks,
►assess and quantify risks with regard to their consequence
(probability and severity) and manageability. Consequences
considered could cover cost, schedule, quality and technical
risks,
►identify ownership - or change of ownership,
►sort actions in risk priority order,
►identify mitigation actions and their timing,
►record what would constitute acceptable residual risk levels,
►provide a view of how risks could be subdivided into level 2 risk
registers,
►reference other studies needed e.g. cost benefit and risk
analysis studies,
►record actions taken,
►record the residual risks - after the risk reduction actions have
been taken.
3. Project Risk Register

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Low Manageability High
LowImpact(likelihood&Probability)High
S
3. Project Risk Management

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Probability Definition
Very High
>25% likely; greater than 1 chance in 4
Uncontrolled.
Will occur whenever circumstances are unfavorable.
Comparable events are frequent.
High
5 - 25% likely; between 1 chance in 20 and 1 chance in 4
Could results from the failure of a single system or control.
Could be expected to occur if this operation were repeated regularly.
Comparable events are within the team's direct experience.
Moderate
1 - 5% likely; between 1 chance in 100 and 1 chance in 20.
Could results from a plausible combination of system or control failures.
Would probably occur if the system were to be operated for long enough.
Comparable events are known to have occurred in the past.
Low
<1% likely; less than 1 chance in 100
Could only occur as the result of multiple, independent system or control failures.
Future occurrence is thought most unlikely.
No comparable occurrence is known.

19. Slide 19 -
Risk Matrix
Impact
Level
Very High Moderate High Very High Very High
High Low Moderate High Very High
Moderate Very Low Low Moderate High
Low Very Low Very Low Low Moderate
< 1% 1 - 5% 5 - 25% > 25%
Low Moderate High Very High
Probability / Frequency

20. Slide 20 -
Manageability Definition
Low
Project Management Team can only influence impact.
Risk reduction measures are unlikely to be cost-effective.
Medium
Project Management Team can influence probability and / or impact.
Risk reduction measures will be roughly cost-neutral.
High
Project Management Team can control probability and / or impact.
Risk reduction measures will be highly cost-effective

21. Slide 21 -
General
Last
Update
Pre-mitigation Risk
Assessment
No
T/
O
Category
Threat/Opportunity
Name
Event
Description/Impact
Owner
Pr
ob
Conseque
nce
Risk
Pro
dn
Ca
pe
x
M's
ton
es
38 T Technical Technical
Management
Technical, planning and
constructability
deficiencies
Rework required and
delays to the overall
project schedule due
to project rephasing.
Interfaces increased
H M H H 483
11 T Manage-
. ment
Drilling Programme
Drilling programme
overrun; consumption of
offshore bedding and
deck space
Delays to subsequent
construction programs
through insufficient
POB and late
completion of offshore
works
VH L M VH 456

22. Slide 22 -
Ashtart Alignment Workshop Risked Schedule

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One key process in risk management is to follow the 5 points
below:
1. Determine which are the key risks which have the potential
to occur and which would serious jeopardize the project.
2. Prioritize these risks in terms of magnitude
3. Determine which one's are under your control and which
one's are completely out of your control.
4. Immediately escalate the risks which are out of your control
upwards to your project board for their information and also
knowledge in how these could be mitigated.
5. Start contingency planning on those risks within your
control.
4. Contingency plan

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4. Contingency plan
In business continuity and risk management, a contingency
plan is a process that prepares an organization to respond
coherently to an unplanned event. The contingency plan can
be also used as an alternative for action if expected results
fail to materialize. A contingency plan is sometimes referred
to as "Plan B”.
Contingency planning goes hand-in-hand with risk
management. Where a risk can be anticipated, contingency
plans can be implemented. If the risk materializes, thus
reducing its impact. Contingency planning can generate a
range of possible responses to potential crisis situations.

25. Slide 25 -
For residual risks that may occur, contingency plans should
be developed in case they do. Contingency plans should be
appropriate and commensurate to the impact of the original
risk. In many cases it is more cost effective to allocate a
certain amount of resources to mitigate a risk rather than
start by developing a contingency plan which, if necessary
to implement, is likely to be more expensive. The number
of scenarios likely to require a full contingency plan
depends upon the project. Contingency planning should not
be confused with the normal re-planning necessary to react
to minor changes in the developing project plan.
4. Contingency plan

26. Slide 26 -
.
The main categories of risks which require to develop a
contingency plan can be summarized as:
►physical – loss of, or damage to, information, equipment or
buildings as a result of an accident, fire or natural disaster
►technical – systems that do not work or do not work well
enough to deliver the anticipated benefits
►labour – key people unable to contribute to the project because
of, for example, illness, career change or industrial action
►political/social – for example, withdrawal of support for the
project as a result of change of government, a policy change by
senior management, or protests from the community, the
media, patients, service users or staff
►liability – legal action or the threat of it because some aspect
of the project is considered to be illegal or because there may
be compensation claims if something goes wrong.
4. Contingency plan

27. Slide 27 -
The importance of a project contingency plan is that it allows
the Project team to deal with known risks with more
confidence. Contingency planning prevents the "panic mode"
situation when we face risks, as it incorporates risks into the
schedule.
On our projects we must also be constantly thinking about
what could go wrong and make sure that we have thought
through contingency plans for them. No project ever goes as
planned and therefore we need to be deliberate and
thoughtful around what could go wrong so we know what to
do in case it happens (versus reacting at the time they
happen). Make sure you have risk and contingency planning
in your focus and revisit them on a regular basis to keep
them updated.
4. Contingency plan

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Thank you for your attention