1. 11.1 Plan Risk Management
The process of defining how to conduct risk management activities for a project
Detailed risk planning enhances the overall probability of successful project completion
Risk planning creates visibility of the degree and types of risk inherent in a specific project
For high risk, large and complex projects – contingency is often added to cover responses to unexpected risks
The risk planning process (11.1) happens
concurrently with the project management
planning process (4.2)
Occurs during Planning
Initiation
Planning
Execution
Close
Monitor
Control
Adapted from PMBOK 5th Edition

2. 11.1 Plan Risk Management Inputs to Plan Risk Management
Project Management Plan
Scope Management Plan
Cost Management Plan
Schedule Management Plan
Communications Management Plan
Project Charter
Enterprise Environmental factors: risk attitudes, tolerances and thresholds.
Organisational Process Assets -
Risk Categories, Common definitions of concepts and terms
Risk statement formats, Standard templates
Risk roles and responsibilities
Authority levels for decision making
Lessons learned from previous projects
Stakeholder Register
Initiation
Planning
Execution
Close
Monitor
Control
Adapted from PMBOK 5th Edition

3. 11.1 Plan Risk Management
The PMBOK includes three techniques for this process – Analysis Techniques, Expert Judgement and Meetings.
Other tools and techniques have been included here from practice -
Meetings
Expert
Judgement
Risk Management
Standards
Analysis
Techniques
Workshops
Stakeholder
Consultation

4. Analysis Techniques – defines the risk context:
11.1 Plan Risk Management
Analysis Techniques – defines the risk context:
Stakeholder attitude to risk:
Risk appetite: acceptable degree of uncertainty
Risk tolerance: degree, amount or volume of risk that an organisation or individual can withstand
Strategic risk exposure  

5. 11.1 Plan Risk Management
Risk Management Standards –
The current standard is: AS/NZS ISO 31000:2009
If you want to look at the standards in more detail TAFE NSI has access to these through the Libraries Project Management Guide - select Australian Standards Online and log in using your username and password.  

6. 11.1 Plan Risk Management Outputs of this process include –
Risk Management Plan
Risk management methodology
Risk management roles and responsibilities
Budgeting
Timing
Risk categories
Definitions of risk probability and impact
Risk probability and likelihood matrix
Revised stakeholder tolerances
Reporting formats
Tracking
Initiation
Planning
Execution
Close
Monitor
Control
Adapted from PMBOK 5th Edition

7. Risk Categories Risk categorisation is critical
It helps to ensure that all aspects of risk on the project are considered
Standard risk categories are hard to find
Start with the Project Management Key Knowledge Areas and industry frameworks
Risk Breakdown Structure –
Lists the categories and sub-categories within which risks may arise for a typical project
Different RBSs will be appropriate for different types of projects, different organisations and different industries
Provides a framework to help ensure all risks are considered

8. Example Risk Breakdown Structure
Project Risk
Breakdown Structure
Project Management
External
Technical
Organisational
Estimating
Planning
Controlling
Communication
Subcontractors &
Suppliers
Regulatory
Market/Economy
External Customer
Environment
Requirements
& Scope
Quality
Performance
& Reliability
Complexity
Technology
Dependencies
PM Environment
Prioritisation
Funding
Human Resources
Methodology &
Materials
Adaptations and additions to the example in the PMBOK
Adapted from PMBoK Guide – 5th Edition

9. Probability and Impact Definitions
Likelihood = Probability
Consequences = Impact
Likelihood is the probability that a risk will occur on a project
Consequences are the impacts that the risk will have on the project outcomes (Scope, Time, Cost and Quality) if it does occur

10. Likelihood and Consequences
Simple Likelihood Scale
Simple Consequences Scale
Rating
Definition
Scale
Almost Certain
Will definitely occur or will occur on an annual cycle 5
Likely
Similar events have been experience several times in the past 20 years 4
Possible
Will occur once every 20 years 3
Unlikely
Occurs from time to time 2
Rare
Occurrence is possible but highly unlikely 1
Rating
Definition
Scale
Severe
Most objectives cannot be met 5
Major
Some important objectives cannot be met 4
Moderate
Some objectives impacted but may still be met 3
Minor
Minor effects that can be remedied 2
Negligible
Almost no impact on objectives 1
Adapted from Risk Management Guidelines – Companion to AS 4360:2004

11. Consequence/Impact Scales from PMBok
From PMBoK Guide – 5th Edition

12. Simple Risk Rating Matrix
Put your likelihood and consequence ratings together and what do you get?
Risk Rating = Likelihood x Consequences
Rating
Severe
Major
Moderate
Minor
Negligible
Almost Certain
Red 25 20 15
Amber 10
Green 5
Likely 16 12 8 4
Possible 9 6 3
Unlikely 2
Rare 1