PMP Study Guide Chapter 6: Risk Planning (Unit 8)

Chapter 6 Risk Planning Planning for Risks Plan Risk Management Identifying Potential Risk Analyzing Risks Using Qualitative Techniques Quantifying Risks Developing a Risk Response Plan

Planning for Risks Risks are events that pose opportunities or threats to the project Risk is uncertainty—the more that’s known about risk, the better

Plan Risk Management The Plan Risk Management process determines and documents how to plan for risks The Plan Risk Management process establishes an agreed- upon basis for evaluating risk Determine and document stakeholder risk tolerance levels

Identifying Potential Risk Budgets/funding Schedules Scope or requirements changes Project plan Technical issues Personnel issues Hardware Contracts Political concerns Business risk Legal risk Environmental risk

Identifying Potential Risk Tools and techniques of the Identify Risk process: –Documentation reviews –Information-gathering techniques –Checklist analysis –Assumptions analysis –Diagramming techniques –SWOT analysis –Expert judgment

Identifying Potential Risk Information-gathering techniques include: –Brainstorming –Delphi technique –Nominal Group technique –Interviewing –Root cause identification SWOT analysis

Identifying Potential Risk Diagramming techniques include: –Cause-and-effect Fishbone diagram or Ishikawa diagram –Flowcharts –Influence diagrams

Analyzing Risks Using Qualitative Techniques Risk probability and impact assessment Probability and impact matrix Risk data quality assessment Risk categorization Risk urgency assessment Expert judgment

Analyzing Risks Using Qualitative Techniques Risk register is updated at the end of the Perform Qualitative Risk Analysis process with: –Risk ranking (or priority) for identified risks –Risks grouped by categories –Causes of risk –List of risks requiring near-term responses –List of risks for additional analysis and response –Watch list of low-priority risks –Trends in qualitative risk analysis results

Quantifying Risk Perform Quantitative Risk Analysis and Modeling Techniques –Sensitivity analysis –Expected monetary value analysis –Decision tree analysis –Modeling and simulation

Risk Impacts Rating Matrix 5.1

Probability and Impact Matrix

Quantifying Risk Tools and techniques of the Perform Quantitative Risk Analysis process include: –Data gathering and representation techniques Interviewing Probability distributions –Quantitative risk analysis and modeling techniques –Expert judgment

Unit 8 Assignment Process Identify at least 10 risks associated with your class project (use the Gauchito Rocket Project as an example to follow). Assign the risk to one of the three impact areas (Cost, Schedule or Quality) - just one, even if it can fit in more than one (to keep the learning exercise simple) Using the Impact Scale on pg. 281 of the PMBOK, decide the level of impact associated with the risk to determine the Impact score for the risk (Very low =.05, Low =.10, etc.) Is the risk an opportunity or threat (this will drive which side of the matrix you work from for each risk (Probability and Impact matrix on pg. 292 of the PMBOK)? Find the Impact score on the bottom row of the P&I matrix on pg. 292 in either the Threat or Opportunities area of the matrix Choose a probability percentage that best fits the risk (reflected as a decimal) from the Probability column on the left-hand side of the matrix on pg. 292 The cell where the probability and the impact scores intersect is the overall P&I score (Ex: Threat type risk with Impact score of.10 and Probability of.50 has a P&I score of 0.05) For each risk that falls in the dark gray area (called Red in the assignment grading rubric in the classroom Assignment area), define a risk response – how will your team respond to the risk? Document all of the above in an Executive Summary using the Executive Summary Template file in Doc Sharing. ***NOTE: list risks in executive summary in priority order based on P&I score (starting with the highest score, ie worst, most impactful risk)