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Project Risk Management
                                        David V. Tennant, PE, PMP


                                      Always assess your risks…


Note: this chapter on
project risks is taken from
one of the PM modules
taught by the Author.




© 2010, Windward Consulting Group
Objectives



  Why anticipating risks is important;
  How to identify and prioritize risks;
  When to perform a risk review;
  How to develop a risk mitigation strategy;
  How to incorporate risks into project planning and
control.
Let’s take stock of where we are in
              the project planning process…
                                         7. Develop
1. Define Proj                             Budget
Requirements                                                   The Next
                                                                 Step
                                                  8. Perform
             2. Define/Confirm                        Risk
                 Objectives                         Review


                            3. ID Stakeholders,
                                Assumptions,
                                 Constraints

                                             4. Build WBS
                                             Define Scope

                                                       5. Build Schedule
                                                       w/ Dependencies

                                                                           6. Assign
                                                                           Resources
What do we Mean by “Risk”

                 - A risk is a possible future event that may affect your
                 project either positively or negatively.
                         A negative risk is a threat.
                         A positive risk is an opportunity.

                 - Risk Management is the process of identifying,
                 quantifying, responding to, and controlling risks.


         Note: A single risk event can cause multiple effects. For example, late
         shipment of a key piece of equipment can lead to schedule delays, penalty
         payments, cost overruns, etc.

Source: Project Management Institute
Why Use Risk Management?


Risk management, in project planning, is very misunderstood.
Project Risk Management will help you:

Reduce crisis management
Minimize project surprises
Anticipate problems thereby making you proactive rather
than reactive
Increase likelihood of project success
Enhance your company’s competitive position
Become a better manager
Components of Risk


            Risk Event = Probability x Impact

A risk event may or may not happen

Probability is the chance the event may occur

Impact is the effect on the project of that event, if it occurs
The Publisher’s Clearing House
                 Risk Event

           Risk Event = Probability X Impact


The Impact is $10,000,000.00.

The Probability is 1/240,000,000.

The Risk Event is worth less than 5¢*

(*Risk Strategy: Save your 42¢ stamp and be 37¢ ahead.)
Goals of Risk Management


The goals of project risk management are to:

  Make known all risks and develop strategies to
  exploit the opportunities and reduce the threats

  Make known all pure, or insurable, risks and
  transfer that risk to third parties or prepare to
  accept the consequences

  Make known all risks that were previously
  unknown risks
Corporate & Individual
               Risk Tolerance

Risk events are—
   Interdependent
     One risk event usually triggers more risk events
     Preventing a risk event may prevent the domino effect
     A large number of risk events will give the perception of an
     increasingly chaotic environment
  Situational
     There is no academic answer or a professional manual to solve risk
     events; each is unique
     Effective risk management must rely on use of risk management
     techniques and tools
Corporate & Individual
                      Risk Tolerance

Magnitude dependent
   With a greater payoff, a risk event with low probability appears to be
   more acceptable*
   With a high impact, the risk event seems more severe even at the same
   probability.

Time oriented
   Risks can only happen in the future
   A probable event, long in the future, is always more uncertain than a short
   range risk
   Risk management improves when a manager can change actions today to
   improve future results

*Consider the Publisher’s Clearing House example
Corporate & Individual
              Risk Tolerance


Value driven
   Personal values of the management team affect corporate
   risk taking
   Similarly, corporate risk aversion or risk acceptance
   affects individual decisions (You can’t steal second while your
   foot’s still on first!)
   Risk taking and risk aversion are unique choices among
   individuals
Key Roles in Risk
                      Management



Project Manager—
   - Provides Team direction on risk processes and use of tools
   - Leads the risk management reviews
   - Keeps sponsor and key stakeholders informed of major risks

Project Team—
   - Participate in project risk reviews
   - Reports status on project risks
   - Assist in implementing strategies when risk occur
Four Major Processes
 Comprise Six Steps

         !   "
Risk Identification

Steps to Risk Identification:

    Use team brainstorming and the WBS to “trigger” ideas.
    Risks events should include internal and external risks.
    Risks should be specific.
    The project team should have a mutual understanding of
   the risk events.

     Important note: Risk reviews are a team activity
Risks—A Practical Process
                                        WBS—Team Brainstorming
                     Inputs             Historical Info
Identify Risks                          SOW
                                        Project Descriptions



                                                     List of Risks
             Assign            Inputs                Risk Sources
           Probabilities                             Schedule/Budget
            & Impacts                                Potential Events


                                                                 List of Risks
                                            Inputs               Risk Rankings
                      Prioritize                                 Tolerances
                        Risks


                                                                                 Prioritized Risks
                                    Develop                  Inputs              Risk Sources
                                                                                 Team Ideas
                                    Strategies                                   Potential Events




                                                                        Inputs             Opportunities
                                                      Develop                              Threats
                                                      Strategies                           Responses
Risks Assessment Tool

                                                                                            Owner




                                           Risk Sample Events
                                           (developed by team consensus)



           1              (       %&             +      0      '
                    "         -        2                                   -            "    .
           & %                                                 +                   %&
                                                               /-
           ,&         (       &      "           +      *      #       %&
           - "                      %&                                             "         #$

                                                               '(
                                                               )                        "
                                                               &               "

Note: P, I denote Probability and Impacts. H=High, M= Medium, L= Low
Identify Risks



Risk identification
                                    Inputs
   The comprehensive
identification of potential risk
events using a structured and         Risk Management Plan
consistent approach                   Organizational Processes
                                      Project Scope Statement(s)
  The reduction of ambiguity          Enterprise Environmental Factors
and the description of the risk       PM Plan
event under study
Identify Risks



Risk identification                      A few tools:
   The comprehensive
identification of potential risk
                                           Documentation
events using a structured and              Brainstorming
consistent approach                        Delphi Technique
                                           Interviewing
  The reduction of ambiguity               Root Cause Identification
and the description of the risk
event under study
                                           SWOT Analysis
                                           Checklists
                                           Diagram Techniques
Identify Risks



Risk identification                      Outputs:
   The comprehensive
identification of potential risk
                                            Risk Register
                                         (example will follow later)
events using a structured and
consistent approach

  The reduction of ambiguity
and the description of the risk
event under study
Risk Identification

It may be useful for the team to put risks into categories.
For example, internal and external (to the organization).
            Internal                          External

Legal                            Suppliers


Technical                        Regulatory


Procurement                      Customer


Organization                     Community


Resources                        Publicity
Risk Identification: BE SPECIFIC




To be useful, the identified risks must be as specific as
possible. The following sentence may help you be more
effective in formulating your risk statements:

“_____________” may occur during ______________
and cause an impact to ________________”
Sources of Risks

 A partial list:
Scope changes
Regulatory interpretations
Changes in requirements
Errors/omissions
Poorly defined roles & responsibilities
Poor estimating
Lack of qualified resources
Supplier problems
Unrealistic deadlines
Constant organizational changes
Misunderstandings (communications)
Always assess your risks…
Always assess your risks…
Stuff
Happens….
Always assess your risks…
Should have been more “risk averse”….
Risk Identification

   Sample Risk Events:
   Supplier may not have system delivered to plant in time
for installation during outage.

   Environmental publicity about power plants may delay
start of permitting process or design activities.

  There is a shortage of qualified people to assist the plant
during installation and start-up of new system(s).

   We may be able to combine procurement of systems to
get a volume discount between three of our plants.
Risk Quantification



  Inputs                                                             Outputs
                                               Risk                   Opportunities to Pursue
    Stakeholder Tolerances
     Risk Sources
                                           Quantification             Threats to Respond to
    Potential Risk Events                                             Opportunities to Ignore
    Cost & Schedule                                                   Threats to Accept
  Estimates
                                          Tools
                                           Expected Monetary Value
                                           Decision Trees
                                           Expert Judgment



Source: Project Management Institute
Risk Quantification
                     Two Types of Risk Analysis
                               Qualitative
  Risk                                               Probability    Impact
  Supplier will not be able to provide key
  components in time for implementation.


            (H= High M= Medium L= Low)

                              Quantitative
Risk                                         Prob.     Impact      Expected
                                                                 Monetary Result
Supplier will not be able to provide key     60%      $250,000       $150,000
components in time for implementation.
Risk Response Development



Inputs                                        Outputs
                           Risk Response      Risk Response Plan
 Opportunities to Pursue   Development
 Threats to Respond to
 Opportunities to Ignore
 Threats to Accept

                           Tools/Strategies
                             Avoidance
                             Mitigation
                             Acceptance
Risk Response Strategies


  Avoidance: Eliminating a threat by eliminating the cause

   Mitigation: Reducing the risk impact by reducing the
probability of the event occurring.
   • Allocate some of the risks to other functional areas
   • Develop oversight policies or processes
   • Deflect to others: Contractors, Insurance, bonding, etc.
   • Reduce risks by adjusting scope, budget, schedule, etc.

  Acceptance: The risks are deemed acceptable with
appropriate contingency planning.
Quantitative Risk Example



Risks                                                P       I         EV

Supplier may not have system delivered in           .6    $600,000   $360,000
time for installation.
There is a shortage of qualified people to assist   .25   $300,000   $75,000
during installation and start-up of new
system(s).
Support equipment may not be available when         .70   $200,000   $140,000
needed.

     Contingency Fund Total                                          $575,000
Risks Response Development– Risk Register
             Risks                 Prob Impact                             Strategies
1. Weak security tools & support    M     H                 Dedicate time to learn support tools
                                                            Provide good estimates for resource requirements
                                                            Perform strong budgeting process
2. Weak external communications     M     H                  Detailed communications planning
and training                                                 Detailed training plan
                                                             “Feed Your Brain” sessions
                                                             Communicate clearly the phased approach and
                                                      deliverables
3. Contract negotiations            H     H                  Early involvement of contract admin./legal
                                                             Work with letter of intent in order to stay on
                                                      schedule (while contracts go through final negotiations)
                                                             If necessary, provide a detailed RFP/RFQ
                                                             Include SLA at the RFP/RFQ level
4. Policy development               L     L      (Obtain mgmt. Sign-off and commitment; adequate review time)
5. Incorrect user requirements      M     H                 Utilize business partners to communicate needs and
                                                      feedback
                                                            IS review board approval
                                                            Sample of current RLN users, field sales, GM ’s
                                                            Sample of current users
                                                            M anage user expectations through communications
6. Poor test plan                  M-H    H                 Allow adequate time for test plan
                                                      development/implementation
                                                            Involve the right people
                                                            ID right scenarios
                                                            Assign responsibilities
                                                            ID success criteria
                                                            Develop checklist/procedures
                                                            Create & maintain issues log
Key Point

It is important to document and communicate
the risk strategy. If certain scenarios occur, it is
important that the key stakeholders know what
course of action will occur and why.

One of the biggest mistakes a project team can
make is having contingency strategies and not
communicate them to others. What good is a
risk strategy if no one is informed?
Risks vs. Opportunity
                                 Over the Project Life Cycle

                          Initiation             Planning       Execution                          Closing
       Costs




                         Risk Event Mitigation



                          High risk occurrence                                  High risk impact



                                                                     pa   cts
                                                                s Im
                                                            Risk



                                                                                   Time
Modified from R. Wideman, Project Risks Management
Key Lessons
   It is always better to avoid risks early in the planning stage rather
than deal with them later during implementation.
    In speculating on risks probability, people have a tendency to be
optimistic. Similarly, it is easier to overlook obstacles than account for
them.

   The severity and impact of a risk event may vary with time and place
in the project life cycle.

  Regular risk reviews are necessary to anticipate problems that may
occur throughout the life-cycle of any project.

   Note: Projects will always have changes. Therefore, risks are
   an integral part of project planning.
When Should Risk Reviews Occur?



   Whenever a risk event is triggered or occurs
   Prior to a “gate” review (go/no go)
   At each stage of the project lifecycle
   Whenever significant events or situations change and a
project impact can occur.



 In other words, risks reviews should occur on a continuous
 basis throughout the life of a project.
Risk Plan Complete. Now What?


   The risk plan is incorporated as a part of the project
plan.
   High-probability, high-impact risk events should be
placed into the project schedule.
  The contingency budget should be adjusted to reflect
probable high-risk costs.
  Key stakeholders should be aware of the major risks.
   The contingency plan will be implemented should a
risk event occur.
Risk Control



Inputs                                     Outputs
                      Risk Control           Implement Risk Plans
Risk Response Plan
                                             Review Schedule &
                                           Budget for Impact(s)
                                             Document for Future
                                           Reference or Paper Trails

                      Tools
                       Documentation
                       Contingency Plans
Risk Monitoring And Control

“Risk monitoring and control is the process of identifying,
analyzing, and planning for newly arising risks, monitoring
trigger conditions, residual risks, and the execution of risk
responses…..” PMBOK®, 2004

Key items to monitor during project lifecycle:
    • Assumptions about the project
    • Trends indicated change in risks
    • Risk procedures/policies are being followed
    • Contingencies are in line with anticipated project
    risks
A Risk Response Process


                                   Update risk
                                   Mgmt. plan     Updated
                   Risk Response
Risk Mgmt.                                          Risk
                      Control
   Plan                                           Response



       Planned responses,
             evaluations                                 Update risk list



                      Project                       Risk
                     Execution                   Assessment
                                    Progress,
                                    Status,
                                    Variances
An Early Warning System

Trends in projects will start to appear about 20% through a
project’s lifecycle. How can we capture these trends?

      Track and monitor schedule and cost variances
      Performed earned value analysis
      Monitor key milestones
      Convene regular status meetings and reporting
      Assign responsibility for risk response
      Manage project changes (especially scope changes)
      Communicate, communicate, communicate
Summary

• Risk events are situational, interdependent, value-based (costs),
  and time-based. Risks reviews are not precise.

• Risk identification is a team activity.

• Although there are six steps to risk management, there are
  basically four processes: identification, quantification, response
  development, and control.

• Risks can be positive (opportunities to chase) or negative (threats
  to minimize or avoid). Mostly, they are negative.
Thank You!

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Project Management Risks Review

  • 1. Project Risk Management David V. Tennant, PE, PMP Always assess your risks… Note: this chapter on project risks is taken from one of the PM modules taught by the Author. © 2010, Windward Consulting Group
  • 2. Objectives Why anticipating risks is important; How to identify and prioritize risks; When to perform a risk review; How to develop a risk mitigation strategy; How to incorporate risks into project planning and control.
  • 3. Let’s take stock of where we are in the project planning process… 7. Develop 1. Define Proj Budget Requirements The Next Step 8. Perform 2. Define/Confirm Risk Objectives Review 3. ID Stakeholders, Assumptions, Constraints 4. Build WBS Define Scope 5. Build Schedule w/ Dependencies 6. Assign Resources
  • 4. What do we Mean by “Risk” - A risk is a possible future event that may affect your project either positively or negatively. A negative risk is a threat. A positive risk is an opportunity. - Risk Management is the process of identifying, quantifying, responding to, and controlling risks. Note: A single risk event can cause multiple effects. For example, late shipment of a key piece of equipment can lead to schedule delays, penalty payments, cost overruns, etc. Source: Project Management Institute
  • 5. Why Use Risk Management? Risk management, in project planning, is very misunderstood. Project Risk Management will help you: Reduce crisis management Minimize project surprises Anticipate problems thereby making you proactive rather than reactive Increase likelihood of project success Enhance your company’s competitive position Become a better manager
  • 6. Components of Risk Risk Event = Probability x Impact A risk event may or may not happen Probability is the chance the event may occur Impact is the effect on the project of that event, if it occurs
  • 7. The Publisher’s Clearing House Risk Event Risk Event = Probability X Impact The Impact is $10,000,000.00. The Probability is 1/240,000,000. The Risk Event is worth less than 5¢* (*Risk Strategy: Save your 42¢ stamp and be 37¢ ahead.)
  • 8. Goals of Risk Management The goals of project risk management are to: Make known all risks and develop strategies to exploit the opportunities and reduce the threats Make known all pure, or insurable, risks and transfer that risk to third parties or prepare to accept the consequences Make known all risks that were previously unknown risks
  • 9. Corporate & Individual Risk Tolerance Risk events are— Interdependent One risk event usually triggers more risk events Preventing a risk event may prevent the domino effect A large number of risk events will give the perception of an increasingly chaotic environment Situational There is no academic answer or a professional manual to solve risk events; each is unique Effective risk management must rely on use of risk management techniques and tools
  • 10. Corporate & Individual Risk Tolerance Magnitude dependent With a greater payoff, a risk event with low probability appears to be more acceptable* With a high impact, the risk event seems more severe even at the same probability. Time oriented Risks can only happen in the future A probable event, long in the future, is always more uncertain than a short range risk Risk management improves when a manager can change actions today to improve future results *Consider the Publisher’s Clearing House example
  • 11. Corporate & Individual Risk Tolerance Value driven Personal values of the management team affect corporate risk taking Similarly, corporate risk aversion or risk acceptance affects individual decisions (You can’t steal second while your foot’s still on first!) Risk taking and risk aversion are unique choices among individuals
  • 12. Key Roles in Risk Management Project Manager— - Provides Team direction on risk processes and use of tools - Leads the risk management reviews - Keeps sponsor and key stakeholders informed of major risks Project Team— - Participate in project risk reviews - Reports status on project risks - Assist in implementing strategies when risk occur
  • 13. Four Major Processes Comprise Six Steps ! "
  • 14. Risk Identification Steps to Risk Identification: Use team brainstorming and the WBS to “trigger” ideas. Risks events should include internal and external risks. Risks should be specific. The project team should have a mutual understanding of the risk events. Important note: Risk reviews are a team activity
  • 15. Risks—A Practical Process WBS—Team Brainstorming Inputs Historical Info Identify Risks SOW Project Descriptions List of Risks Assign Inputs Risk Sources Probabilities Schedule/Budget & Impacts Potential Events List of Risks Inputs Risk Rankings Prioritize Tolerances Risks Prioritized Risks Develop Inputs Risk Sources Team Ideas Strategies Potential Events Inputs Opportunities Develop Threats Strategies Responses
  • 16. Risks Assessment Tool Owner Risk Sample Events (developed by team consensus) 1 ( %& + 0 ' " - 2 - " . & % + %& /- ,& ( & " + * # %& - " %& " #$ '( ) " & " Note: P, I denote Probability and Impacts. H=High, M= Medium, L= Low
  • 17. Identify Risks Risk identification Inputs The comprehensive identification of potential risk events using a structured and Risk Management Plan consistent approach Organizational Processes Project Scope Statement(s) The reduction of ambiguity Enterprise Environmental Factors and the description of the risk PM Plan event under study
  • 18. Identify Risks Risk identification A few tools: The comprehensive identification of potential risk Documentation events using a structured and Brainstorming consistent approach Delphi Technique Interviewing The reduction of ambiguity Root Cause Identification and the description of the risk event under study SWOT Analysis Checklists Diagram Techniques
  • 19. Identify Risks Risk identification Outputs: The comprehensive identification of potential risk Risk Register (example will follow later) events using a structured and consistent approach The reduction of ambiguity and the description of the risk event under study
  • 20. Risk Identification It may be useful for the team to put risks into categories. For example, internal and external (to the organization). Internal External Legal Suppliers Technical Regulatory Procurement Customer Organization Community Resources Publicity
  • 21. Risk Identification: BE SPECIFIC To be useful, the identified risks must be as specific as possible. The following sentence may help you be more effective in formulating your risk statements: “_____________” may occur during ______________ and cause an impact to ________________”
  • 22. Sources of Risks A partial list: Scope changes Regulatory interpretations Changes in requirements Errors/omissions Poorly defined roles & responsibilities Poor estimating Lack of qualified resources Supplier problems Unrealistic deadlines Constant organizational changes Misunderstandings (communications)
  • 23. Always assess your risks…
  • 24. Always assess your risks…
  • 26. Always assess your risks…
  • 27. Should have been more “risk averse”….
  • 28. Risk Identification Sample Risk Events: Supplier may not have system delivered to plant in time for installation during outage. Environmental publicity about power plants may delay start of permitting process or design activities. There is a shortage of qualified people to assist the plant during installation and start-up of new system(s). We may be able to combine procurement of systems to get a volume discount between three of our plants.
  • 29. Risk Quantification Inputs Outputs Risk Opportunities to Pursue Stakeholder Tolerances Risk Sources Quantification Threats to Respond to Potential Risk Events Opportunities to Ignore Cost & Schedule Threats to Accept Estimates Tools Expected Monetary Value Decision Trees Expert Judgment Source: Project Management Institute
  • 30. Risk Quantification Two Types of Risk Analysis Qualitative Risk Probability Impact Supplier will not be able to provide key components in time for implementation. (H= High M= Medium L= Low) Quantitative Risk Prob. Impact Expected Monetary Result Supplier will not be able to provide key 60% $250,000 $150,000 components in time for implementation.
  • 31. Risk Response Development Inputs Outputs Risk Response Risk Response Plan Opportunities to Pursue Development Threats to Respond to Opportunities to Ignore Threats to Accept Tools/Strategies Avoidance Mitigation Acceptance
  • 32. Risk Response Strategies Avoidance: Eliminating a threat by eliminating the cause Mitigation: Reducing the risk impact by reducing the probability of the event occurring. • Allocate some of the risks to other functional areas • Develop oversight policies or processes • Deflect to others: Contractors, Insurance, bonding, etc. • Reduce risks by adjusting scope, budget, schedule, etc. Acceptance: The risks are deemed acceptable with appropriate contingency planning.
  • 33. Quantitative Risk Example Risks P I EV Supplier may not have system delivered in .6 $600,000 $360,000 time for installation. There is a shortage of qualified people to assist .25 $300,000 $75,000 during installation and start-up of new system(s). Support equipment may not be available when .70 $200,000 $140,000 needed. Contingency Fund Total $575,000
  • 34. Risks Response Development– Risk Register Risks Prob Impact Strategies 1. Weak security tools & support M H Dedicate time to learn support tools Provide good estimates for resource requirements Perform strong budgeting process 2. Weak external communications M H Detailed communications planning and training Detailed training plan “Feed Your Brain” sessions Communicate clearly the phased approach and deliverables 3. Contract negotiations H H Early involvement of contract admin./legal Work with letter of intent in order to stay on schedule (while contracts go through final negotiations) If necessary, provide a detailed RFP/RFQ Include SLA at the RFP/RFQ level 4. Policy development L L (Obtain mgmt. Sign-off and commitment; adequate review time) 5. Incorrect user requirements M H Utilize business partners to communicate needs and feedback IS review board approval Sample of current RLN users, field sales, GM ’s Sample of current users M anage user expectations through communications 6. Poor test plan M-H H Allow adequate time for test plan development/implementation Involve the right people ID right scenarios Assign responsibilities ID success criteria Develop checklist/procedures Create & maintain issues log
  • 35. Key Point It is important to document and communicate the risk strategy. If certain scenarios occur, it is important that the key stakeholders know what course of action will occur and why. One of the biggest mistakes a project team can make is having contingency strategies and not communicate them to others. What good is a risk strategy if no one is informed?
  • 36. Risks vs. Opportunity Over the Project Life Cycle Initiation Planning Execution Closing Costs Risk Event Mitigation High risk occurrence High risk impact pa cts s Im Risk Time Modified from R. Wideman, Project Risks Management
  • 37. Key Lessons It is always better to avoid risks early in the planning stage rather than deal with them later during implementation. In speculating on risks probability, people have a tendency to be optimistic. Similarly, it is easier to overlook obstacles than account for them. The severity and impact of a risk event may vary with time and place in the project life cycle. Regular risk reviews are necessary to anticipate problems that may occur throughout the life-cycle of any project. Note: Projects will always have changes. Therefore, risks are an integral part of project planning.
  • 38. When Should Risk Reviews Occur? Whenever a risk event is triggered or occurs Prior to a “gate” review (go/no go) At each stage of the project lifecycle Whenever significant events or situations change and a project impact can occur. In other words, risks reviews should occur on a continuous basis throughout the life of a project.
  • 39. Risk Plan Complete. Now What? The risk plan is incorporated as a part of the project plan. High-probability, high-impact risk events should be placed into the project schedule. The contingency budget should be adjusted to reflect probable high-risk costs. Key stakeholders should be aware of the major risks. The contingency plan will be implemented should a risk event occur.
  • 40. Risk Control Inputs Outputs Risk Control Implement Risk Plans Risk Response Plan Review Schedule & Budget for Impact(s) Document for Future Reference or Paper Trails Tools Documentation Contingency Plans
  • 41. Risk Monitoring And Control “Risk monitoring and control is the process of identifying, analyzing, and planning for newly arising risks, monitoring trigger conditions, residual risks, and the execution of risk responses…..” PMBOK®, 2004 Key items to monitor during project lifecycle: • Assumptions about the project • Trends indicated change in risks • Risk procedures/policies are being followed • Contingencies are in line with anticipated project risks
  • 42. A Risk Response Process Update risk Mgmt. plan Updated Risk Response Risk Mgmt. Risk Control Plan Response Planned responses, evaluations Update risk list Project Risk Execution Assessment Progress, Status, Variances
  • 43. An Early Warning System Trends in projects will start to appear about 20% through a project’s lifecycle. How can we capture these trends? Track and monitor schedule and cost variances Performed earned value analysis Monitor key milestones Convene regular status meetings and reporting Assign responsibility for risk response Manage project changes (especially scope changes) Communicate, communicate, communicate
  • 44. Summary • Risk events are situational, interdependent, value-based (costs), and time-based. Risks reviews are not precise. • Risk identification is a team activity. • Although there are six steps to risk management, there are basically four processes: identification, quantification, response development, and control. • Risks can be positive (opportunities to chase) or negative (threats to minimize or avoid). Mostly, they are negative.