Project

Management &
Finance
Lecture 8 – ‘Risk
Management (CO1,
PO12)

Ir. Victor Nageshwar. A

Lecturer @ TARUC
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management’

– Lecture 8: Project Risk Management

– This lecture covers following sub topics:
– The Risk Management
– Risk Quantification Techniques
– Relevant areas of the bodies of knowledge
– Summary
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– RISK Management
• An evaluation of potential risks can shown at an early stage whether or not a
proposal is worth pursuing.
• Furthermore, there are well-developed procedures for managing risk as an
ongoing process throughout a project.
• The practices are most well developed in industries where the projects are
typically very large (such as heavy engineering), or where there is a significant
technical risk element (aerospace projects).
• There is also significant body of knowledge on financial risk management, which
is separate from the discussion here.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– RISK Management (continue…)
• Instead we will focus on managing process and outcome risks. The application of
active risk management is applicable and beneficial to all projects.- right from
small, one – persons project up to very large complex projects that were the
origin of many of the techniques. Many eventualities, gives the right framework,
can be identified in advance to give the project manager a chance to determine
the necessary course of action.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK
– Definition: - The possibility of suffering harm or loss in terms of money
– An uncertain event or condition that, if it occurs, has a effect on an objective.
• Uncertainty inherent in plans and the possibility of something happening (i.e. a
contingency) that can affect the prospects of achieving business or project goals).
– The first very broad as a definition and causes some issue as to what then can be managed, as
the possibilities for harm or loss at the extreme are almost limitless for even a small projects.
– Risk Management therefore needs to incorporate some means of not only identifying potential
risks but also analyzing the potential of each so that the most significant once can be
“managed” on an on going basis.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)
– The Second Definition: - considers the fundamental of any looking into
the future – as happens in project planning that there is uncertainty.
– The objective here is not to eliminate uncertainty or risk. Indeed, accept
notion in many aspect of business life is that risk is proportional to return.
– The greater the risk that you run, the larger the return could be (if all goes
well, etc ). However, this does apply in some respects to project and their
management.
–
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) UNKNOWN
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) RISK AND UNCERTAINTY
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS

– SCOPE
– Clarity of scope defined
– Estimated extent of work required
– Omissions and over inclusions
– Customer driven scope variations
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS

– Schedule / Time
– Estimated project duration
– Estimated activity duration
– Time to market
– Launch date
– Timing of management reviews
– Timing of approvals received.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS

– Technology
– Technological developments
– Technological limitations
– Expertise availability
– Execution limitations
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS

– Resources
– Quantity required
– Quantity available
– Quantity expectations
– Availability
– Suitability
– Skills match with requirements
– Clarity of roles and responsibility
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….) TYPICAL AREAS OF UNCERTAINITY IN PROJECTS

– Stakeholders Expectations
– Team members
– Executive Stakeholders
– External Stakeholders
– “Phantom” Stakeholders
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)

– RISK AND ISSUES

– Issues are well defined and we know will happen in
the future. They may include problems that occur
that can effect the project and be caused by certain
unexpected events.
– Unexpected events that cause these issues are risks.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)

– PROJECT RISK
– .
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)

– Definition of terms /concepts

– RISK MANAGEMENT
– Includes risk planning, risk identification,
Quantitative, Qualitative risk analysis, risk
response planning and monitoring and controlling
risk response.
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)
– Definition of terms /concepts
– RISK Event
– Something identified in advance that may or may not happen
– Opportunities
– Positive impacts or outcomes associated with risk events
occurring
– Threats
– Negative impacts or outcomes associated with risk events
occurring..
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)

– Definition of terms /concepts

– Uncertainty
– Lack of knowledge about an event that reduces confidence in
conclusions drawn from data
– Risk Factors
– The probability that a risk event will occur (how likely)
– The range of possibility outcomes (impact or amount at stake)
– Expected timing for it to occur in the project life cycle (when)
– The anticipated frequency of risk events from the source (how Often)
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– The nature of RISK (Continue….)

– Definition of terms /concepts

– RISK Taker
– Someone who takes the risk
– RISK Averse
– Someone who does not want to take risk
– RISK Neutral
– Someone who takes measured risk
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– Definition of terms /concepts – RISK Breakdown Structure
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– Definition of terms /concepts
– Secondary Risk
– New risk that arises as a direct outcome of implementing a risk
response
– Workaround
– Response to a negative risk that has occurred and is not planned in
advance of the occurrence of the risk event
– Known unknowns
– Risks handled plan Risk Response.
– Unknown unknowns
– Process and unknown risks handled by Management Reserves
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– Definition of terms /concepts
– RISK Tolerance
– Degree of level of risk that is acceptable to a person or
an organization
– RISK Threshold
– A specific point at which a risk becomes unacceptable
– RISK Neutral
– Someone who takes measured risk
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– Definition of terms /concepts
– Improving RISK Identification
– List risks, not issues
– List both positive as well as negative risks
– List risk from the perspective of all the
stakeholders identified.
 Project Management & Finance
Lecture 8 (Week 11) Project Risk Management

– Lecture 8: Project Risk Management

– Definition of Project RISK Management
– Systematic process to identify, analyze and respond to project
risks
– Definition of project RISK
– Project risks is defined as any uncertain event, that can
affect the outcome of a project either in a positive or
negative sense
– Risks that lead to negative outcomes are negatives risks
– Risks that lead to positive outcomes are positives risks.
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– The process of identifying How risk management will be
structured and performed for a project
– Involves the project manager, sponsor, customer and other
stakeholders.
– Appropriate o the size and complexity of the project and to
the experience and skill level of the project time.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– The requirements for Plan Risk management
– Project management Plan
– Project Charter
– Stakeholder register
– Enterprise environmental factors
– Organizational Process assets
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– Think about…..
– Why do you need the following when planning for risk???
– Project management Plan
– Project Charter
– Stakeholder register
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– RISK Management Plan
– A guide to identify and analyze
risks in the project
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– RISK Management Plan
 It has a bunch of risk categories that you’ll use to classify your
risks. Some risks are technical, like component that might turn out
to be difficulty to use. Others are external, like changes in the
market or even problems with the weather. Risk categories help you
to build a risk breakdown structure (RBS)
 You’ll need to describe the methods and approach you’ll use for
identifying and classifying risks on your project. This section of the
document is called the methodology
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk Management

– RISK Management Plan
 It’s important to come up with a plan to help you figure out
how big a risk’s impact is and how likely a risk is to happen.
The impact tells you how much damage the risk will cause to
your project. A lot of projects classify impact on scale from
minimal to severe. Or from very low to very high. This section
of the document is called the definitions of probability
and impact
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk

Management

– RISK Management
Plan
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Plan Risk

Management RISK categories – Causal vs Impact
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Identify Risks
 Process that determines which risks may affect the project
and documents their characteristics
 Should involve all stakeholders
 Is an iterative process
 The output of this process is a compilation of risks involved
written in a Risk Register
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The requirements for Identify Risk
– Risk Management Plan
– Cost Management Plan
– Schedule Management Plan
– Quality Management Plan
– Scope Baseline
– Activity Cost estimates
– Activity Duration estimates
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The requirements for Identify Risk
– Stakeholder Register
– Project Documents
– Procurement Documents
– Enterprise Environment Factor
– Organizational Process Assets
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The requirements for Identify Risk
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The methodologies for Identify Risk
– Check list analysis
– Assumptions analysis
– Diagramming techniques (fishbone analysis, flowcharts, influence
diagrams)
– Documentation Reviews
– Information Gathering Techniques
– Expert Judgement
– SWOT analysis
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The outcome of Identify Risk
– List of Risks
– List of potential response
– Root cause of Risks
– Updated risk categories
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis
– A process to prioritize the identified risks for further action
and analysis
– Is a subjective analysis of the risks identified
– It is a cost effective way of prioritizing risks for plan risk
response strategy
– Has to be revisited as the project unfolds
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The requirements for Perform Qualitative Risk Analysis
– Risk management plan
– Scope baseline
– Risk register
– Enterprise Environments Factor
– Organizational process assets
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The methodology for Perform Qualitative Risk Analysis
– Risk Probability and impact assessment
– Probability and impact matrix
– Risk data quality assessment
– Risk categorization
– Risk urgency assessment
– Expert Judgement
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The outcome Perform Qualitative Risk Analysis
– Project Document Updates
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Probability and Impact Matrix
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Example of a 5x5 Project Risk Matrix
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Example of a 3x3 Project Risk Matrix
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Output of Qualitative Risk Assessment
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Negative Risk Assessment
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis - Methodology
– Risk Treatment / Action Plan
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Rating of any one risk can depend on:
– Bias of the person doing the rating
– How risk averse the person is?
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Risk data quality assessment:
– Ensures accuracy and appropriate level of understanding of
the risk information provided
– Focuses on accuracy and reliability of the data provided
– Involves determining the following for each risk
– Extend of understanding of the risk
– Data available about the risk
– Quality of the data
– Reliability and integrity of the data
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Risk Categorization:
– Assessment of which work packages, potential causes,
processes, people have the most risk associated with them
– Helpful in risk response planning as allows elimination of
many risks at once by eliminating one cause
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Risk Urgency Assessment:
– Assessment of how urgent risks identified are in terms of
how quickly risks may move through the processes
– Some risk may occur soon and take a long time to plan a risk
response
– Such risks are moved immediately into risk response
planning stage
– Severity of risk = Urgency * impact * probability
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Findings can be used to:
– Compare the risk of the project to other projects
– Determine whether the project should be selected,
continued or terminated
– Determine whether to proceed with the preform
Quantitative Risk Analysis or Plan Risk Response Process.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Output is risk register updates:
– Risk ranking for the project compared to other projects
– List of prioritized risks and their probability impact ratings
– Risks grouped by categories
– List of risks for additional analysis and response
– List of risk requiring additional analysis
– Watch Lists
– Trends.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Qualitative Risk Analysis -
– Involves numerically analyzing the probability and impact of
risks moved forward from qualitative risk analysis
– Looks at how risks can affect the objective of the project
– Not always necessary before moving to risk response planning
– Called risk assessment – identifying risk through quantitative
risk analysis
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis – the requirements
– Risk management plan
– Cost management plan
– Schedule management plan
– Enterprise environmental factors
– Organizational process assets.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis – The Purpose
– Determine which risk events warrants a response
– Determine overall project risks
– Determine quantified probability of meeting project
objectives
– Determine cost and schedule reserves
– Identify risk requiring most attention
– Create realistic and achievable cost, schedule and scope
targets.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis – Techniques
– Interviewing
– Cost and Time estimating
– Delphi technique
– Historical records
– Expert Judgement
– Expected monetary value
– Monte Carlo Analysis
– Decision Tree
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis –
– Expected Monetary Value: EMV = P x I
– Where P = Probability (0.9)
and I = Impact (USD 1,000,000)

EMV = 0.9 x 1,000,000

= USD 900,000
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis –
– Simulation Technique
– Uses network diagram and estimates to “perform” the
project many times and to simulate the cost or schedule
results of the project
– Evaluates overall risk of the project
– Translates uncertainties inti impacts to the total project
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis –
– Monte Carlo Analysis
– Since a Monte Carlo Analysis uses quantified data,
this allows project managers to better communicate
with senior management, especially when the latter is
pushing for impractical project costs
– Also, this type of an analysis allows the project
managers to quantify perils and ambiguities in project
schedule
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis –
– Decision Tree
– Facilitates analysis of choice available before a
decision is to be made
– Takes into account future events in making decisions
– Calculates expected monetary value in complex
situations
– Involves mutual exclusivity
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis – Outcomes
– Prioritized list of quantifies risks
– Amount of contingency time and cost reserves needed
– Possible realistic and achievable completion dates and
projects costs
– Quantified probability of meeting project objectives
– Trends in quantitative risk analysis
– Process that analyzes the numerical probability of
occurrence on project objectives, as well as the extent
of overall project risks
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Perform Quantitative Risk Analysis – Outcomes
– Process that develops options and actions to enhance
opportunities and to reduce threats to project
objectives
– May include options for the top risk such as
– Do something to eliminate the threats before they happen
– Do something to make sure the opportunities happen
– Decrease the probability and/or impact of threats
– Increase the probability and/or impact of opportunities
– For the remaining (residual) threats that cannot be eliminated
– Do something if the risk happen (Contingency plan)
– Do something if the contingency plan are not effective (fall back
plan)
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Plan Risk response– Requirements:
– Risk Management Plan
– Risk register
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Plan Risk response– Requirements:
– Risk Management Plan
– Risk register
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Plan Risk response–
– Choices for response strategies for threats
– Avoid (eliminate the cause)
– Mitigate (reduce probability or impact of a threat)
– Transfer ( make the other party responsible for the
risk)
– Accept
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Plan Risk response– Negative Risk Management
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Risk response Strategies– Negative Risk Management
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Risk response Strategies for opportunities
– Exploit (reverse of Avoid)
– Enhances (reverse of mitigate)
– Share (allocate ownership of the opportunity to a third
party)
– Share (allocate ownership of the opportunity to a third
party)
– Accept
Project Management & Finance
Lecture 7 (Week 9) Project Quality Management’

RISK MANAGEMENT PROCESS Done during

Plan Risk Management Planning Process Group
Identification Risks Planning Process Group
Perform Qualitative Risk Analysis Planning process Group
Perform Quantitative Risk analysis Planning Process Group
Plan Risk Response Planning Process Group
Control Risk Monitoring and Control
Process Group
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk– outcomes
– Project Management Plan
– Project Document Updates
– Risk Register updates
– Residual risks
– Contingency plan
– Risk response owners
– Secondary risk
– Risk triggers
– Contracts
– Fallback plans
– Reserves
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk –
– Project Document Updates
Process that implements risk response plans, tracks
identified risks, monitors residual risks and evaluates
risk process effectiveness throughout the project
– It also involves
– Risk Reassessments
– Risk audits
– Reserve analysis
– Work around
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Monitor and review –
– Risk Management is an ongoing and dynamic process
as circumstances change may alter risks or create new
risks.
– Project Management Team must monitor risks and
review the effectiveness of the risk treatment plan and
strategies until project completion.
– During the risk monitoring process, regular risk audits
and risk reassessments are carried out to assess
existing risk and identify new risks.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk – Risk appetite:
– Risk appetite looks at how much risk one is willing to
accept
– The appetite for risk may be described as being a
– High
– Medium
– Low
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk – Risk tolerance:
Risk tolerance is the willingness of some person or
some organization to accept or avoid risk.
There may be large variation among individuals in
terms of willingness to accept or avoid risk and this
affects the overall organizational tolerance to risk.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk – requirements:
– Project Management Plan
– Risk register
– Work performance data
– Work performance reports
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Control Risk –Types of Risk Attitudes
– A risk seeking attitude leans towards encouraging risk
– A risk averse attitude errs on the side of caution
– A risk neutral attitude o=is one in which effort taken is
directly proportional to the risk faced.
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– Types of Risk Attitudes- Risk Attitude Spectrums
 Project Management & Finance
Lecture 8 (Week11) Project Risk Management’

– Lecture 8: Risk Management

– The End