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Risk Management


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This was a presentation I put together based off of Rita Mulcahy's PMP Exam Prep 7th edition on Risk Management

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Risk Management

  1. 1. Risk Management Prepared by Stephen Penn October 6, 2012Information derived or quoted from Rita Mulcahy
  2. 2. 5 Overall Project ManagementProcesses with Risk Management •Plan RM •ID & Managed •ID Risk •Qualitative •Quantitative •Plan Risk Responses•Monitor & Control Risks
  3. 3. Risk Management Process OpportunitiesThreats
  4. 4. Concepts and TermsUncertainty Lack of knowledgeRisk Factors 1. How likely a risk event will occur 2. Impact or amount at stake 3. When it will occur 4. How often it will occurRisk Averse Some one that does not want to take on riskRisk Tolerance Degree of risk acceptableRisk Thresholds Point at which risk becomes unacceptableRisk areas Project Constraints (scope, time, cost, etc)
  5. 5. Plan Risk Management •How much time should we spend? •Who will be involved? •How should we perform risk management?
  6. 6. “What will I have when I’m done with …?”• Risk Management Plan 1. Methodology 2. Roles & Responsibilities 3. Budgeting 4. Timing 5. Risk Categories 6. Definitions of probability & Impact 7. Stakeholder tolerances 8. Reporting & Tracking
  7. 7. Identify Risk (tools & techniques)Documentation Reviews Documents can help identify riskBrainstorming One idea generates anotherDelphi Technique Experts participate anonymouslyInterviewing Interview participants, stakeholders, expertsRoot Cause Analysis Reorganized by root causes to find more risk
  8. 8. Identify RiskSWOT Analysis Identifies strengths and weaknesses and thus riskChecklist Analysis Checklist of risk categories to identify riskAssumptions Analysis Validate assumptions which may lead to riskDiagramming Cause and effectTechniques diagrams and flowcharts
  9. 9. Outputs to Identify Risk• Risk Register Example
  10. 10. Qualitative Risk Analysis
  11. 11. Perform Qualitative (Subjective) Risk Analysis(Probability and Impact Matrix)
  12. 12. •Watchlist•Risk Grouped by category•Risk Register Updates
  13. 13. • Numerically analyzing the probability and impact of risks• how risk could affect the objectives of the project 1. Determine risk that warrant a response 2. Determine overall project risk 3. Determine quantified probability to meet project objectives (e.g. 75% chance) 4. Determine cost and schedule reserves 5. Identify risks requiring more attention 6. Create realistic and achievable cost, schedule, or scope targets.
  14. 14. Quantitative Risk Analysis1. Investigate highest risks on the project2. Determine type of probability distribution3. Which risks have the most impact4. Determine quantified risk through EMV or Monte Carlo
  15. 15. Determine Quantitative Probability Impact• Interviewing •Expert Judgment•Cost & Time Estimating •EMV•Delphi Technique •Monte Carlo•Use of historical records •Decision Trees
  16. 16. Decision Tree – choose between many alternatives (Impact)
  17. 17. Quantitative 1. Prioritized list of quantified risk 2. Amount of contingency time and cost reserves needed 3. Realistic and achievable completion dates and project costs 4. The qualified probability of meeting objectives 5. Trends in quantitative risk analysis
  18. 18. “What are we going to do now about each top risk?”1. Eliminate the threats before they happen2. Make sure opportunities happen3. Decrease the probability and/or impact of threats4. Increase the probability and/or impact of opportunities• For Residual Threats 1. Contingency Plans 2. Fallback Plans
  19. 19. Monitor and Control RiskWorkarounds Unplanned responses to deal with problemsRisk Reassessments Review risk plan, risk register and update documentationRisk Audits Prepared by PM. Prove you have identified risk, have plans for major risk, risk response owners are prepared. How much reserve remains and howReserve Analysis much is needed (checkbook)Status Meetings Team meetings where risked is discussedClosing of Risks Close finished risk to focus on remaining risk
  20. 20. Outputs of Monitor & Control Risk1. Risk Register 1. Outcomes of risk assessment and risk audits 2. Updates to risk management and ID of new risk Updates 3. Closing of risk 4. Details of what happened 5. Lessons learned2. Change Requests Monitor & Control process will uncover changes3. PM Plan Updates Updates to schedule, cost, quality, hr, etc4. Project Doc Updates Roles & Responsibilities, stakeholder management, quality metrics5. Organization Process Risk templates like risk register, checklists, and other data which becomes historical records Assets Updates
  21. 21. Practice Exam
  22. 22. Practice Exam
  23. 23. Practice Exam
  24. 24. Answers
  25. 25. Answers
  26. 26. Answers