1. Managing Project Risk
Chapter 8
Copyright 2012 John Wiley & Sons, Inc.

2. PMBOK® Risk Management Processes
Plan Risk Management
Determining how to approach and plan the project risk management activities. An output of this process is the development of a risk management plan.
Identify Risks
Deciding which risks can impact the project. Risk identification generally includes many of the project stakeholders and requires an understanding of the project’s goal, as well as the project’s scope, schedule, budget, and quality objectives.
Perform Qualitative Risk Analysis
Focusing on a qualitative analysis concerning the impact and likelihood of the risks that were identified.
Perform Quantitative Risk Analysis
Using a quantitative approach for developing a probabilistic model for understanding and responding to the risks identified.
Plan Risk Responses
Developing procedures and techniques to reduce the threats of risks, while enhancing the likelihood of opportunities.
Monitor and Control Risks
Providing an early warning system to monitor identified risks and any new risks. This system ensures that risk responses have been implemented as planned and had the effect as intended.

3. IT Project Risk Management Processes

4. Risk Planning
Requires firm commitment by all stakeholders to a RM approach Assures adequate resources are in place Focuses on preparation

5. Risk Identification Tools & Techniques
Nominal Group Technique Checklists SWOT Analysis Cause & Effect (a.k.a. Fishbone/Ishikawa)

6. Risk Analysis & Assessment Quantitative Approaches
Quantitative Probability Distributions
Discrete
Binomial
Continuous
Normal
PERT
TRIANG

7. Binomial Probability Distribution

8. Normal Distribution

9. Normal Distribution Rules of thumb with respect to observations
Approximately….
68% + 1 standard deviations of mean
95% + 2 standard deviations of the mean
99% + 3 standard deviations of the mean

10. PERT Distribution

11. PERT Distribution

12. Simulations Monte Carlo
Technique that randomly generates specific values for a variable with a specific probability distribution
Goes through a number of trials or iterations and records the outcome
@RISK®
An MS Project® add in that provides a useful tool for conducting risk analysis of your project plan

13. Monte Carlo Simulation

14. Risk Strategies

15. Contingency and Fallback Plans, Contingency Reserves

16. Risk Strategies Depend On

17. Risk Monitoring & Control

18. Controlling Risks
Involves executing the risk management proce

19. Risk Response Plan should include:
A trigger which flags that the risk has occurred An owner of the risk (i.e., the person or group responsible for monitoring the risk and ensuring that the appropriate risk response is carried out) A response based on one of the four basic risk strategies Adequate resources

20. Lessons learned and best practices help us to:
Risk Evaluation
Lessons learned and best practices help us to:
Increase our understanding of IT project risk in general.
Understand what information was available to managing risks and for making risk-related decisions.
Understand how and why a particular decision was made.
Understand the implications not only of the risks, but also the decisions that were made.
Learn from our experience so that others may not have to repeat our mistakes.