Documente Academic
Documente Profesional
Documente Cultură
Start and finish time Emergency exit rules Participants expectations Ground rules
3
General Rules
● No more than 2 unexcused absence
● Active participation
● No mobile phones
● Respect each other
● Team work
4
Course Object ives
● Define general concepts of risk management
● Risk management in Projects
● Deliver main information about the risk management processes
● Understand risk analysis processes
● Acquire the essential knowledge about why risk management is important
5
Agenda
● Project Risk and Risk Management
● Definitions in Risk Management
● Role of Project Manager in Risk Management
● Plan Risk Management
● Identify Risks
● Perform Qualitative Risk Analysis
● Perform Quantitative Risk Analysis
● Plan Risk Responses
● Monitor & Control Risks
● Benefits of Risk Management
6
Definit ion of Risk Management
Group Discussion
● Risk Management is a part of the project management processes, and consistently following
that process is important for getting the desired results. It allows you to take control of the
project, rather than letting the project control you.
Risk Fact ors
Threat
Opportunity
A risk that has a positive impact on a project A risk that has a negative impact on a project is
is known as an opportunity. known as a threat.
●
Types of Risks Business risks- Normal risks of doing
business that carry the potential of
both gains and losses
● Pure, or insurable, risks- Risks that
present potential for loss only
Know n Unknow ns vs. Unknow n Unknow ns
Known Unknowns Unknown Unknowns
?
Japanese at t it ude
● "If one can do it, I can do it.
Murphy’s Law-
No problem – 100 percent done –
olacağa çarə yoxdu,
Problem yoxdu İnşallah
qismət
It has never
happened, will not More urgent – yanır,
Urgent – tez-bazar
happen – camaatda yanan məsələdi
necə, bizdə də elə
Confusing Risk Terminologies
Risk Rating – 1 to 10
Risk Rating
Risk Score – P x I
Contingency Fallback
Secondary Risk
Plan Plan
Workaround
Emergent Risk
Unknown Risk
Confusing Risk Terminologies cont inued…
vs.
Risk Issue
vs.
Respond Analyze
Plan Risk Management
Risk Management Planning
Plan Risk Management —
● Defines how to conduct Risk Management Activities
● Defines and establishes the strategy on how to IDENTIFY, ANALYZE, RESPOND AND MONITOR,
TRACK and CONTROL risks
● Integrate Risk Management with other Project Management activities
Benefit s of Risk Management Planning
● Ensure that the degree, type & visibility of risks are appropriate.
● Obtain agreement & support from stakeholders.
● Risk management process is supported & performed effectively.
Key Areas t o Focus
Tools and Techniques used t o plan
Risk Management
1. Stakeholder risk profile analysis: grade & qualify stakeholder’s risk
Analytical appetite & tolerance.
Techniques 2. Strategic risk scoring sheet: high-level assessment of the risk exposure of
the project.
What are the What are the What opportunities What threats could
strengths of the weaknesses of the might the project endanger the project?
organization? organization? present?
Risk Met a-Language
● Risk Meta-language is a structured definition of risk which separates cause, risk and effect.
● Example: Because of <cause>, <risk> might occur, which would lead <effect >
● Let's use “Costumer’s Competition” both Cause, Risk and Effect
Customer’s Competition
The customer’s which could cause new use which could result in
competition on this project of existing technology that depletion of resource time
is more scientifically we have little experience to create a change order
advanced than the with to be requested by the and learn the skills
customer customer
Risk Met a-Language – Example
Customer’s Competition
We are being asked by our which means the causing the loss of about
customer to come up with customer’s competition 50% of the work at the time
a unique product that will may retaliate with a new this occurs and extensive
create a totally new product of its own before redesign and additional
market. Unfortunately, the we finish this one cost
customer has competitors
that are cash rich
Risk Met a-Language – Example
Customer’s Competition
This project is so unique which may cause everyone leading to the customer’s
that we might be asked to to learn about the project competition announcing a
write about it in trade new product of its own,
magazines creating a risk that we
need to add scope to the
existing project
Result – Risk Regist er
Risk regist er (2)
Qualit at ive Risk Analysis
Qualit at ive Risk Analysis Object ives
● Process of prioritizing risks for further analysis or action, by assessing & combining their
probability and impacts
● Assesses priority of identified risks using:
○ Their relative probability & impact
○ Timeframe for response
○ Risk Tolerance
● Reflects the risk attitude of stakeholders.
● Bias should be identified and corrected during this process.
● It is a rapid & cost effective to establish priority for Risk Response Planning and Quantitative
Analysis.
Benefit s of Qualit at ive Risk Analysis
● Enables Project manager to reduce level of uncertainty & to focus on high priority risks.
● Categorize sources of risks.
● Identifying common effects allows identification of areas having greatest risk exposure.
Document s needed for Qualit at ively Analyzing
t he Risks
● Risk Management Plan
● Scope baseline
● Risk Register
● Enterprise environmental factors
● Organizational process assets
Tools and Techniques t o Qualit at ively Analyze
t he Risks
Risk
Risk data
Probability and Probability and Risk Risk Urgency
quality
Impact Impact Matrix Categorization Assessment
assessment
Assessment
Analytic
Expert Estimating Past Project
Hierarchy
Judgement Techniques Information
Process
Probabilit y and Impact Mat rix
● Qualitative risk analysis
is subjective, and the
results may be biased.
Risk Cat egorizat ion based on Risk Breakdow n
St ruct ure [RBS]
Result – Qualit at ive Risk Analysis
● Risk Register Updates:
○ Assessments for each risk
○ Risk ranking
○ Risk urgency
○ Risk categorization
○ Watch list for low priority risks
Quant it at ive Risk Analysis
Quant it at ive Risk Analysis Object ives
● Numerically analyze the effect of identified risks on the overall project objective.
● Evaluate the aggregate effect of all risks.
● Might not be feasible due to lack of sufficient data.
● Might not conducted because of small size of project
Benefit s of Quanit at ive Risk Analysis
● Provides quantitative risk information to support decision making in order to reduce uncertainty.
Document s needed for Quanit at ively Analyzing
t he Risks
● Risk Management Plan
● Schedule Management Plan
● Risk Register
● Enterprise environmental factors
● Organizational process assets
Tools and Techniques t o Quant it at ively
Analyze t he Risks
Decision
Probability Sensitivity EMV
Interviewing Tree
Distributions Analysis Analysis
Analysis
FMEA / Fault
Monte Carlo Expert Historical
Tree
Analysis Judgement Information
Analysis
Int erview ing
● Interviewing relevant stakeholders helps determine the three-point estimates (Pessimist, Most
Likely, Optimist) for each WBS element for triangular, beta or other distributions.
Weighted Three-Point
= (O+4M+P) / 6 = (O+M+P) / 3
Average Estimates
Mont e Carlo Analysis
● Monte Carlo Simulation is used when there are continuous probability distribution iterations
performed to calculate the possible impact on project objectives. It translates uncertainties into
impacts to the total project.
OUTPUTS
EM V= P x I
● It helps determine which risks need the most attention and should therefore be moved into the
Plan Risk Responses Process.
QUANTITATIVE RISK ANALYSIS FORM
Example
● Chart shows that activities B
and C have the most cost risk on
the project, so these activities
will move into the Plan Risk
Responses Process.
● The ones in the brackets are
opportunities (as they are
benefits or savings, they are
subtracted from EMV).
Decision Tree
A decision t ree—
● Is an appropriate method for making decisions when future events are not certain, using the probability
and impact of all risks, and combining their effect to derive an overall project measure such as value or
cost:
○ It takes into account future events
○ It calculates the expected monetary value
○ It involves mutual exclusively
Example – Decision Tree w it h Probabilit y
Example – Decision Tree w it h EMV
Exercise
Contingent Contingency
Strategy for Strategies for Contingency
Response Brainstorming Checklist Reserve
Threats Opportunities Planning
Strategies Analysis
Industry
Critical Chain EMV / Decision Delphi Force Field Nominal Group
Knowledge Interviews
Method Tree Technique Analysis Technique
base
Technical
Risk Variance &
Risk Audit Performance
Reassessment Trend Analysis
Measurement
Disasters
• A government agency calculates the risk of an earthquake based
on the frequency of historical earthquakes in a region.
• They regularly communicate the risks to the public in a variety of
media in order to encourage preparation such as earthquake
resistant construction.
Kyushu Island in Japan
● The most dangerous Place
● 90% of all earthquakes in in the world happen here
● People living in that Island doesn’t think about
leaving it
● Are always ready for the disaster risks
Risk Communicat ion examples
Environment
• A city warns of forecast poor air quality and communicates
restrictions put in place to mitigate the situation.
China Environment al Pollut ion
● Industrialization
● Soil Contamination
● Waste
● Electronic Waste
● Water / Air Pollution
Safety
• A construction company conducts mandatory annual safety
training for all employees that includes a breakdown of the most
common safety risks related to different types of construction
sites.
• Training is aimed at creating awareness of common risks and
communicates actions that can be taken to reduce risk
Met hods of Communicat ing Risks
● Risks can be communicated to stakeholders using the following methods:
○ Project Management Plan
○ Project Monthly Reports
○ Activity Status Reports
○ Bar Charts
○ Risk Register
○ Activity Estimating Form
Benefit s of Risk Management
● It allows you to spot the areas in trouble and need attention
● There are fewer surprises – early awareness of potential problems
● Better decision making by management
● Less guesswork
● Less surprises
● Aware and focused team
● Fewer cost and assigned budget for managing risks
● Much higher expectation of success
So, w hat is a risk?
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