To understand the risk management process essay assignment - Essay Prowess

To understand the risk management process essay assignment

To understand the risk management process essay assignment

  • Project risk management
  • Learning Objectives
  • To understand the risk management process
  • To analyse the causes of risks
  • To use tools of risk management
  • Project Risk
  • Definition
  •    “An event with an undesirable outcome for the project that may happen sometime in future”
  • PMBOK states project risk as:

                                “An uncertain event or condition that if occurs has a positive or negative condition on a project outcome”

  • Two Categories of Risk
  • Speculative risk – Meaning a chance of loss or chance of a profit, e.g Business expands then it can use vast resources and go bust – RBS, or it could expand and increase profits – ALDI
  • Most projects contain speculative risk – Eurostar
  • Pure Risk – Meaning only a chance of loss, e.g. driving a car involves a chance of a accident, these are insurable
  • Characteristics of Project Risk
  • Mostly they are partially unknown
  • Changing with time
  • Are manageable
  • Exist only in future tense
  • Exist on all projects
  • Risk management process
  • Risk identification:
    • to identify the sources of risks
  • Risk analysis:
    • to characterise and analyse risks and their effects on project objectives
  • Risk response:
    • to take steps to enhance opportunities and reduce threats to meeting project objectives
  • Risk monitoring and control:
    • to monitor known risks, identify new risks, to reduce risks
  • Risk identification: some techniques
  • Analysing historical records
  • Structured questionnaires/interview
  • Brainstorming
  • Structured checklist (review project specification document and WBS)
  • Systems analysis: examine all areas of project
  • Scenario analysis (what-if)
  • Project Risk Sources

Takes account of risks arising from three principle sources:

  1. Risks under project control
  2. Risks in the wider external environment which are controllable elsewhere
  3. Risks that are uncontrollable – natural disasters, political instability, world prices, interest rates
  4. Risk analysis
  5. To assess the likelihood and impact to projects of identified risks
  6. To determine their magnitude and priority
  7. One technique:  using a probability/impact matrix or chart to produce an overall ranking for project risks
    1. one axis to represent the relative probability of a risk and the other axis to represent its relative impact on the project
  8. Risks Analysis Technique: Fishbone
  9. Fishbone diagrams: cause and effect analysis
  10. Risks Analysis Technique: Fishbone
  11. Risk Response Planning
  12. Organising the risk response planning towards the following:
    1. Eliminating risk wherever possible
    1. Isolating and minimising risk
    1. Developing alternative course of action
    1. Establishing time and money reserves to cover risks that can be avoided
  13. Contingency Planning
  14. Required if risk turns to reality
  15. Required for resources and tasks that are mission critical
  16. Identify alternate resources
  17. Resources needed to launch and maintain such processes
  18. Lead time for substitute processes to become functional
  19. Trigger point that causes contingency plans
  20. Risk Monitoring and Reporting
  21. Revisit risk response regularly
  22. Some changes require the revisiting of risk response plan –
    1. Prepare for major decision points
    1. In preparation and immediately following audits
    1. After changes in schedule, cost, scope or quality
  23. Program Evaluation and Review Technique (PERT)
  24. PERT is a network analysis technique used to estimate project duration when there is a high degree of uncertainty about the individual activity duration estimates
  25. PERT can be used to reduce risks in scheduling