Program Semester Subject Code Subject Name Unit number Unit Title Lecture Number Lecture Title

: MBA : IV : PM0016 : Project Risk Management :1 : Understanding Risk in Projects :1 : Understanding Risk in Projects

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Unit-1 Understanding Risk in Projects

Understanding Risk in Projects

Objectives : The objectives of this lecture are to: Define risk Analyse the risk management process Explain risk management plan Define risks management responsibilities

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Unit-1 Understanding Risk in Projects

Lecture Outline

Introduction

Risk Management Process

Risk Management Process contd. Creating a Risk Management Plan Risk Management Responsibilities

Risk Management Responsibilities I

Risk Management Responsibilities II Summary Check Your Learning

Activity

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Unit-1 Understanding Risk in Projects

Introduction

Risk is considered as a positive or negative effect of uncertainty for achieving projects objectives. Project risk management is a strategic tool which can be used to deal with risks in order to achieve project objectives. The purpose of risk management is to reduce the possibility of failure or any uncertainty to meet the project's main objectives. Therefore it is essential for a risk management process to determine and assess risks in a project.

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Unit-1 Understanding Risk in Projects

Risk Management Process

Phases of Risk Management Process

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Unit-1 Understanding Risk in Projects

Risk Management Process contd

Risk can be handled with the help of various contexts. The different contexts are as shown in the following figure.

Establishing the context

Strategic Context

Organisational Context

Risk management Context

Project Context

Risk Appetite

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Unit-1 Understanding Risk in Projects

Creating a Risk Management Plan

Seven steps of risk management plan

Involve
Collate Assess Group Identify actions Create contingency plan Assign
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Unit-1 Understanding Risk in Projects

Risk Management Responsibilities

Responsibilities of the project risk manager Choosing a suitable project risk management method and

implementing it
Developing a strategy for handling project risk Implementing a strong environment for project risk management Handling project risk within the risk management context

Responsibilities of project risk management team Helping to identify and analyse risks Guiding on any aspect of risk management process

Tracking the risk profile and provide feedback on risk profiles

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Unit-1 Understanding Risk in Projects

Risk Management Responsibilities contd

Responsibilities of project risk profile owners Incorporating risk management and risk action plans in the risk profiles. Reporting on any additional risks. Communicating with team members about a risk.

Responsibilities of project risk custodians Classifying all possible risks into specific groups. Allotting project risk profile owners to each group. Ensuring all the resources to implement risk action plans successfully.

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Unit-1 Understanding Risk in Projects

Risk Management Responsibilities contd

Responsibilities of project team members Providing correct information of the risks.

Supporting the execution of action plans as defined by the project

risk profile owners. Reporting to risk management team about the newly occurred risks.

The

implementation
with the

of

risk

management
of

process

becomes

successful processes.

combination

existing

organisational

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Unit-1 Understanding Risk in Projects

Summary

A project risk can be useful or harmful to the success of a project. The project risk management is the responsibility of project team members, risk profile owners, risk custodians, risk manager and the project risk management team.

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Unit-1 Understanding Risk in Projects

Check Your Learning

1.

Mention the fifth and sixth steps of risk management plan. Identify actions Create contingency plan

Ans: The fifth and sixth steps of risk management plan are:

2. State whether the following statement true or false.

a. Project risks have only negative effects on projects. projects. Ans: False-Project risks have both positive and negative effects on

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Unit-1 Understanding Risk in Projects

Activity

Consider that you are the manager of transport department. List out the risks that can occur in a project of your department.

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