1. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. PMI – Project Risk Management Sanjeev, Vivek, Manju

2. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Agenda Risk Management Knowledge Sharing session –Introductions and Overview05 mins – Manju –Risk Management Planning10 mins – Manju –Risk Identification10 mins – Manju –Qualitative Risk Analysis10 mins – Vivek –Quantitative Risk Analysis10 mins – Sanjeev –Risk Response Planning10 mins – Vivek –Risk Monitoring & Control10 mins – Manju Sample Questions 20 mins Open Discussions10 mins

3. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Project Risk Management - Overview The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of events adverse to the project. Key Process Areas Risk Management Planning – deciding how to approach, plan, and execute the risk management activities for a project Risk Identification – determining which risks might affect the project and documenting their characteristics Qualitative Risk Analysis– prioritizing risks for subsequent further analysis or action by assessing and combining their probability of occurrence and impact Quantitative Risk Analysis – numerically analyzing the effect on overall project objectives of identified risks Risk Response Planning – developing options and actions to enhance opportunities, and to reduce threats to project objectives Risk Monitoring & Control – tracking identified risks, monitoring residual risks, identifying new risks, executing risk response plan, and evaluating their effectiveness throughout the project life cycle

4. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com

5. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Risk Management Planning

6. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Management Planning Risk Management Planning : Inputs, Tools & Techniques, and Outputs

7. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Management Planning Objectives How to approach and conduct Risk Management activities Prepare Risk Management Plan

8. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Management Planning : Inputs 1.Enterprise Environmental Factors Risk Attitudes Risk Tolerance 2.Organizational Process Assets Risk Categories Common Definition of Concepts and terms Standard templates Roles and Responsibilities 3.Project Scope Statement 4.Project Management Plan

9. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Management Planning : Tools & Techniques 1.Planning Meetings and Analysis Basic plan for conducting Risk Management activities Risk Cost Elements Risk Scheduled Activities Risk responsibilities Tailoring of Organization templates

10. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Management Planning : Outputs 1.Risk Management Plan Methodology Roles and Responsibilities Budgeting Timing Risk Categories Definition of risk probability and impact Probability and impact matrix Revised stakeholder’s tolerance Reporting Format Tracking

11. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Risk Identification

12. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Identification Process

13. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Identification Objectives Determining Risks that could impact the project Documenting project risk characteristics

14. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Identification: Inputs 1.Enterprise Environmental Factors Published Information Commercial databases Academic studies Benchmarking and other Industry studies 2.Organizational Process Assets Historical experiences 3.Project Scope Statement Uncertainty in project assumptions 4.Risk Management Plan Assignment of roles and responsibilities Provision for Risk Management activities in Schedule and Budget Categorizing Risks 5.Project Management Plan

15. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Identification: Tools & Techniques 1.Documentation Reviews Performing structured reviews of Project artifacts 2.Information Gathering Techniques Brainstorming Delphi Technique Interviewing Root Cause Identification SWOT Analysis 3.Checklist Analysis Developing Risk identification checklist based on historical precedence's 4.Assumptions Analysis 5.Diagramming Techniques Cause-and-effect diagram System or process flow charts Influence diagrams

16. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Identification: Outputs 1.Risk Register List of identified risks List of potential responses to a risk Root causes of risk Updated risk categories

17. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Qualitative Risk Analysis

18. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Qualitative Risk Analysis

19. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Qualitative Risk Analysis Objectives Determining the priority of the identified risks Ranking the risk by priority Determining the impact on the project objectives

20. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Qualitative Risk Analysis : Inputs 1.Organizational Process Assets Data about risks on past projects Lessons learned knowledge base 2.Project Scope Statement Projects of common or recurring type Projects using first-of-its-type technology 3.Risk Management Plan Roles and responsibilities Budget, and schedule activities for risk management Risk Categories Definition of probability and impact Probability and impact matrix Revised stakeholders tolerance 4.Risk Register

21. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Qualitative Risk Analysis : Tools & Techniques 1.Risk Probability and Impact Assessment Risk assessment by interviews Meetings with participants 2.Probability and Impact Matrix Risk ratings Classification of risks as high, moderate and low Risk Score Card 3.Risk data Quality Assessment Accuracy Quality Integrity of data about risk 4.Risk categorization By sources of risk By area of project affected 5.Risk Urgency Assessment

22. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Qualitative Risk Analysis : Outputs 1.Risk Register Updates Relative ranking or priority list of project risks Risks grouped by categories List of risks requiring responses in the near term List of risks for additional analysis and response Watchlists of low priority risk Trends in qualitative risk analysis results

23. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Quantitative Risk Analysis

24. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis Overview Performed on the Risks already prioritized by QRA Assigns the numerical value to the risk. Various techniques for assigning the numerical values – Monte Carlo Simulation and Decision tree Analysis. Objectives Quantify the possible outcome of risk and its probability Identify the realistic and achievable cost, schedule and scope of the project Determine the management decision – GO or NO-GO

25. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis

26. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis : Input 1.Organizational Process Asset Information on similar risk in other projects, Risk database and study of similar risk by specialist 2.Project Scope Statement Initial Risk identification 3.Risk Management Plan Roles and Responsibilities, risk categories, revised stakeholders 4.Risk Register List of identified risks, Risk ranking and Risk Categorization 5.Project Management Plan Project Schedule Mgt Plan  Controls Project schedule Project Cost Mgt Plan  Controls Project budget

27. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis : Tools & Technique 1. Data Gathering Interviewing – Info collected for Cost Optimistic (low), Pessimistic (High) and most likely (Medium) Expert Judgment – SMEs validate the risk and data

28. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis : Tools & Technique 2. Modeling Techniques Sensitivity Analysis – helps to determine which risks have most impact on project EMV Analysis – Expected monetary value is a statistical concept and calculates the average outcome of future scenario EMV = Each possible outcome of risk x probability of occurrence Decision Tree Analysis – It is a method to determine which of two decisions is the best to make e.g. Buy-verses-Build scenario, Lease-or-purchase equations, and use in-house resources rather than outsourcing.

29. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Quantitative Risk Analysis : Output 1.Risk Register Updates Probabilistic analysis of the project Probability of achieving cost and time objectives Prioritized list of Risks –  that pose greatest threat or greatest opportunity.  that influence the critical path  That require greatest cost contingency.

30. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Risk Response Planning

31. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning Risk Response Planning is the process of developing options, and determining actions to enhance opportunities and reduce threats to the project objectives.

32. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning Objectives How to approach and conduct Risk Response Planning Prepare Risk response Plan

33. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning : Inputs 1.Risk Management Plan Some components of the Risk Management Plan that are important inputs to Risk Response Planning may include risk thresholds for low, moderate, and high risks to help understand those risks for which responses are needed, assignment of personnel and scheduling and budgeting for risk response planning. 2.Risk Register Important inputs to Risk response planning include the relative rating or priority list of project risks, a list of risks requiring response in the near term, a list of risks for additional analysis and response, trends in qualitative risk analysis results, root causes, risks grouped by categories, and a watchlist of low priority risks.

34. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning : Tools & Techniques 1.Strategies for Negative Risks or Threats Avoid Transfer Mitigate 2.Strategies for Positive Risks or Opportunities Exploit Share Enhance 3.Strategy for both Threats and Opportunities Acceptance 4.Strategies for Negative Risks or Threats Contingent Response Strategy

35. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning : Outputs 1.Risk Register (Updates) Identified Risks, their descriptions, area of project affected, their causes, and how they may affect project objectives. Risk owners and assigned responsibilities Prioritized lists of project risks and probabilistic analysis of the project Agreed upon response strategies Specific actions to implement the chosen response strategy Symptoms and warning signs of risks occurrence Budget and Schedule activities required to implement the chosen responses Contingencies reserves of time and cost designed to provide for stakeholders risk tolerances Contingency plans and triggers that call for their execution Fallback plans for use as a reaction to a risk that has occurred, and the primary response proves to be inadequate Residual risks that are expected to remain after planned responses have been taken, as well as those that have been deliberately accepted. Secondary risks that arise as a direct outcome of implementing a risk response.

36. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Response Planning : Outputs Contingency reserves that are calculated based on the quantitative analysis of the project and the organisations risks thresholds. 2.Project Management Plan (Updates) Risk response strategies, once agreed to, must be fed back in to the appropriate processes in other knowledge areas, including the project’s budget and schedule. 3.Risk-Related contractual Agreements Contractual agreements, such as agreements for insurance, services, and other items as appropriate, can be prepared to specify each party’s responsibility for specific risks, should they occur.

37. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Risk Monitoring & Control

38. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control Process

39. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control Objectives Identify, analyze and plan for newly arising Risks Keeping track of the identified risks Reanalyzing existing risk Monitoring trigger conditions Reviewing the execution of risk responses Determine the project assumptions if they are still valid Determine if Risk, as assessed, has changed from its prior state, with analysis of trends Determine risk management policies and procedures are being followed Determine whether Contingency reserves of cost or schedule are modified in line with the risk of the project

40. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control : Inputs 1.Risk Management Plan Risk Owners Agreed upon risk Responses Specific implementation actions Residual and secondary risk Low priority risk Time and cost contingency reserves 2.Risk Register 3.Approved Change Requests Impact on risk register Impact on risk response plan Impact on risk management plan

41. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control : Inputs 4.Work Performance Information Project deliverables status Corrective actions Performance reports 5.Performance Report Project work performance

42. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control : Tools & Techniques 1.Risk Reassessment Identification of new Risk Reassessment of the risk 2.Risk audits Document the effectiveness of risk response Document the effectiveness of risk management process Performance reports 3.Variance and Trend Analysis Earned Value Analysis Trend analysis 3.Reserve Analysis 4.Technical Performance Measurement 5.Status Meetings

43. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com Risk Monitoring & Control : Outputs 1.Risk Register Updates Outcomes of Risk reassessment, Risk Audits and Risk Reviews Outcome of Project’s risk, and of risk responses 2.Requested Changes 3.Recommended Corrective Actions Contingency Plan Workaround Plans 4.Recommended Preventive Actions 5.Organizational Process Assets Updates 6.Project Management Plan Updates

44. Proprietary and confidential. © 2006 Perot Systems. All rights reserved. All registered trademarks are the property of their respective owners. www.perotsystems.com People. Processes. Technology. Results. Thank you