Risk Management in Projects

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 Why?

minimises likelihood and impact of things going

wrong on a project
saves time and money
increases stakeholders confidence in projects
ability to achieve objectives and deliver benefits

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 How?

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 How?

Workshops
Identify risks
Analyse [Measure]
Plan [Mitigate] & record
Manage

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 When?

early stages of project planning and at key

project stages
new risks might emerge during the project

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 Identify

Group into topic areas e.g. Identify

Technical, environmental,
political, resource
Event > Consequence > Impact
environmental, political, resource
There is a risk that (event) meaning
(consequence) which will result in
(impact)

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 Assess

A combination of the probability of

an event, and its impact. Assess

Probability x Impact
1 = Very unlikely 1 = Minor
2 = Unlikely 2 = Significant
3 = Likely 3 = Serious
4 = Very likely 4 = Major

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 Risk management matrix

Aka Probability Impact Grid (PIG)

Assess

impact

probability
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 Plan

the 4 Ts... Plan

Tolerate - accept and live with the risk

Treat - apply a mitigation plan

Terminate - stop the activity if the risk is

unacceptable

Transfer - to a more appropriate owner, an

insurer or contractor.
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 Risk responses

Threats Opportunities
Avoid Exploit
Transfer Share
Mitigate Enhance
Accept Accept
Share Share

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 Measure Risk

Risk Consequence of Prob Impact Score Control Prob Impact Controlled Cost of Cost of
risk Action Score mitigati impact
(Mitigating on
Measures)

Trip Slight 3 1 3 Tape down 1 1 1 5 0

over inconvenience cable
cable
on
office
floor

Breaking an 2 4 8 Move cable 0 4 0 1,000 10,000

ankle to another
location

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 Cost of Risk

Risk consequence impact Likelihood Best (value) Worst (value) Final (Agreed) Owner

Trip over cable Broken ankle Medium - time Medium 1,000 10,000 5,000 Contractor
on office floor off work and
may have to
employ
contract staff

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 Monitor & review

Monitor
&
review
Review risks regularly, when a risk is in close
proximity or at critical points in the project
lifecycle
Report progress to project board
Beware of continual good news!
Communication is critical
Have you done everything you reasonably
can?
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 WISH
What is the risk? (identify)
Identify an owner and assess the likelihood of the risk
occurring and the impact if it does (assess)
Support with a risk treatment plan and decide on the
appropriate response (the 4 Ts) What can be done to
minimise the harm and maximise the success? (plan)
Have a look at the risks periodically - they change with
time. Review at least quarterly. Execute the mitigation
plan and demonstrate how it is reducing the likelihood
and / or the impact. (monitor)

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 Test

Project risk management is best described as:

a. managing responses to threats.
b. identifying and acknowledging threats and opportunities.
c. planning responses to threats.
d. minimising threats and maximising opportunities.
Which one of the following best describes a project issue?
a. A major problem that requires formal escalation.
b. A problem that the project manager has to deal with on a day-to-day
basis.
c. An uncertain event that may or may not occur.
d. An opportunity that occurs through change control.

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The main outcome of risk identification, in a risk management process,
is to:
a. identify and determine the relative importance of the project risks.
b. identify and describe all risks that might occur on the project.
c. identify and determine the responses to the project risks.
d. identify and describe risks that have occurred on previous projects.
Which one of the following statements about the project risk register is
false?
a. It facilitates the review and monitoring of risks.
b. It facilitates the risk appetite.
c. It facilitates the recording of risk responses.
d. It facilitates the recording of risks.

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Who has ultimate responsibility for project risk?
a. Steering group.
b. Risk owner.
c. Project sponsor.
d. Project manager.
The main aim of a project risk management process should be to:
a. identify project risks and then manage them appropriately.
b. identify all project risks and transfer them immediately.
c. identify all the things that are threats or opportunities on a project.
d. satisfy the organisations project management process.

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Why undertake risk management on projects?
a. It is part of company management procedures
b. It reduces uncertainty in the cost and time estimates of the project
c. Without it, the project will fail to deliver to cost or time
d. Without it, communication will be poor between team members.

Which is the best definition of a risk?

a. Something that could be of benefit or detriment to the project
b. Something that could be to the benefit of the project
c. Something that could be to the detriment of the project
d. A risk is a fact that is detrimental to the project

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After analysing the risks what does risk management involve?
a. Responding to risks by either reducing or transferring them
b. Responding to all risks appropriately
c. Responding to risks by controlling them
d. Responding to risks by transferring them

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