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Murphy's law

is an adage or epigram that is typically stated as:

“Anything that can go wrong will go wrong but at the
worse time”.
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PROJECT RISK MANAGEMENT

• An evaluation of potential risks can show at an early stage

whether or not a proposal is worth pursuing.

• Definition of Risk:
• It is the uncertainty inherent in plans and the possibility of
something happening, that can affect the prospects of
achieving business or project goals.
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Reasons for Risk:

 Technical Problems Aerospace projects

 Human activities
 Change in objectives of the project
 Competition.
 Lack of Support.
 Financial Problems
 etc… etc…
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 For a success of a project it is

necessary that any potential risk that
is threatening or likely to affect a
project must be managed in a way
that may become least harmful to
the project.

For this purpose Risk management

provides a tool to manage risks.
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RISK MANAGEMENT

Definition:
It is a tool which is directed to minimize
risk or uncertainty and improve the
probability of success by identifying,
analyzing, quantifying, and mitigating the
risks.
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Stages in Risk Management

1. Risk Identification

2. Risk Quantification

3. Risk Mitigation
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1. Risk Identification

 What are the key factors for Project Risks.

 How could these factors emerge
 What would make it to go wrong

For Example:
 Unexpected changes from stakeholders
 Technological problems
 Staffing changes
 Financial problems
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2. Risk Quantification
Assessment of…..
A. How likely the event is to occur with
how much magnitude
Improbable Highly Likely

B. Extent of the effect of the event

 Critical: Total Failure
 Major: Increase costs or hold up the
activities
 Minor: Cause inconvenience but not set
the project back.
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2. Risk Quantification
Assessment of…..
C. How much the events or problems might
be hidden that may affect the project.

 Problems or events emerge because their progress were not

visible.
 How easy it would be to conceal the fact that things were going
wrong with part of the project.

For Example:
 Interaction between the team members
 Communication gap
 Politics among the project members
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2. Risk Quantification

Risk Quantification Techniques:

i. Decision trees-expected benefits of alternative decisions

ii. Sensitivity Analysis- effect of changes

iii. Monte Carlo Simulation-behavior of systems

iv. Failure Mode Effect Analysis- Potential failure and its

effect on outcomes as a total risks
Total risk= Likelihood x Severity x Difficulty in detection

V. Cause and effect diagrams

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RISK MITIGATION
3.
Employment of the procedures required to ensure that….
 The likelihood of occurring the event is reduced OR
 The effects are managed or mitigated (reduced) in someway.
For Example:
The risk of a critical activity running late can be reduced by
making sure that the necessary resources required are
available.
 CONTINGENCY PLANNING