1. Managing Project Risk – A simplified approach Presented by : Damian Leonard

2. 2 Agenda  What is risk?  Types of risk  Risk Management Process  Risk Management Game  Action Plan  Questions

3. 3 What is Risk?  Risk  The possibility that an undesired outcome - or the absence of a desired outcome – disrupts your project  An uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective (time, cost, scope or quality)  Elements of Risk  Event  Probability  Impact

4. 4 Types of Risk  Type of risks  External or Internal  Business risks – Risks of doing business  Pure, or insurable, risks – Risk that cause loss only  Known or Unknown  Known – Risks that have been thoroughly documented, reviewed  Unknown – Risk that can not be proactively managed

5. 5 Risk Management Process  Risk Management  “..Includes the processes concerned with conducting risk management planning, identification, analysis, responses, and monitoring and control on a project” (PMI Body of Knowledge, 2009).  How?  Increase the probability and impact of positive events  Decrease the probability and impact of events adverse to the project  PMBOK, 2009

6. 6 Risk Management Process  Risk Management Planning – Steps  Identify – Comprehensive identification of potential risks.  Analyze – Estimate the probability of occurrence and impact and rank them  Plan – Using prioritized risks, create strategies, primary response and incorporate options into the project plan.  Execute – Carry out risk management plan as part of project.  Monitor – Evaluate the results of risk strategies.  Document – Create documentation for historical purposes.

7. 7 Risk Management – Identification  Risk Identification  Comprehensive identification of potential risk  Iterative process that occurs through the project lifecycle

8. 8 Risk Management – Identification  Identification method  Nominal Group Technique  Create Risk Planning Teams  Each member of the team writes down 6 – 12 major issues on postit notes  Continue until all lists are complete  Team Leader finalizes risk  Places on risk form  Provide findings back to a larger group

9. 9 Risk Management – Analysis  Risk Analysis  Estimate probability and impact (Qualitative Risk Analysis)  Prioritize risks analyzed during qualitative analysis (Quantitative Analysis)

10. 10 Risk Management – Analysis  Estimate probability and impact (Qualitative Risk Analysis)  Assess probability and impact for each identified risk, determining  The level of probability for each identified risk against each objective (time, cost, etc)  The impact of each risk on each objective  Develop Risk Probability and Impact Matrix  Develop risk rating  Determine classifications for high, medium and low risks

11. 11 Risk Management – Analysis  Estimate probability and impact (Qualitative Risk Analysis)  Evaluate Risk Data Quality  Categorize risk based on parts of the project affected  Assess risk response urgency

12. 12 Risk Management – Analysis  Prioritize risks analyzed during Qualitative Analysis  Put a figure on project outcomes  Estimate the probability of meeting project objectives (time, cost, etc)  Raise up risks requiring the most attention  Update project cost, schedule and scope

13. 13 Risk Management – Analysis  Prioritize (Quantitative Risk Analysis)  Filter list  Probability exceed 25%  Cost impact of risk exceeds $10K  Will this risk occur within the next 3 months?  Impact – Will any customer see impact of this risk?  Likelihood – Have you seen this before? Is this likely?  Remaining list use CRR  Review each risk and compare with other risks  Ask each team member which risk deserves higher priority  Points are given each time a risk gets a vote  List is prioritized based on scores  Team Leader will review with the group

14. 14 Risk Management Game  Plan  Develop and document options and plans to reduce threats to the project’s outcomes  Document actions needed to enhance opportunities  Determine best response strategy for each risk (acceptance, mitigation, transference, and avoidance

15. 15 Risk Management Game  Plan – Response Strategy  Acceptance (accept the consequences) only if you believe the risk exposure is acceptable to your organization  Active – Develop a contingency plan  Passive – Fully accept the consequences or implement a workaround  Mitigation (reducing the expected value of a threat by reducing probability or impact)  Transference (pass the threat to another group)  Avoidance (eliminating a specific threat)

16. 16 Risk Management Game  Plan  Work through prioritized risk listing  Create risk response strategies for both threats and opportunities  Evaluate and select a primary response  Answer the following for each risk  How can this threat be avoided or opportunity be pursued?  What does it mean to transfer this threat or enhance the opportunity  Can we mitigate or transfer this threat or enhance the opportunity

17. 17 Risk Management Game  Execute & Monitor  Determine how to carry out risk management plan with project areas  Carry out risks as actual events occur  Establish an early warning system  Changes in stakeholder attitudes  Changes in forecasted project end dates  Cost variance  Schedule variance

18. 18 Questions?