10.1 Explain Each Stage in a Risk Management Process

Define Project Risk Management

Project Risk Management

- is a process that allows individual risk events and overall risk to be understood and managed

proactively, optimising success by minimising threats and maximising opportunities.

-“An uncertain event or set of circumstances that should it or they occur would have an effect on the achievement of one or more of the project objectives”.

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What is in a Risk Management Plan ?

What is in a Risk Management Plan ?

- defines how all the risk processes will be carried out.

It does not consider individual risks.

It is reflective of the context of the project, and allows for similar risks to be managed

differently.

Plan Content:

The methodology and data sources

Roles and responsibilities

Budgeting for risk management

Timing; when risk assessments will be carried out

Qualitative and quantitative scoring methods

Risk thresholds

Reporting format

Tracking

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Terminology

Terminology

Risk Management

Risk Planning

Risk Cause/Event/Effect

Risk Probability/Impact

Risk Proximity

Inherent/Residual/Secondary risk

Risk Author/Owner/ Actionee

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Risk Management Process Diagram

Identify

Identify

Brainstorming

Interviews

Risk Identification workshops

Checklists

Questionnaires

Expert facilitation

Data from previous projects

Assumption analysis

SWOT analysis

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Assumption Analysis

SWOT Analysis

SWOT Analysis

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Assess

Assess

Probability

Example probability scale

oHighly Unlikely

oUnlikely

oEven Likelihood

oProbable

oHighly Likely

Impact

•Example impact scale

oInsignificant

oMarginal

oSerious

oCritical

oCatastrophic

•Impact could be on:

oProgress, time, cost, quality, benefits,

environment, image, legal...

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Severity (or Exposure)

Severity(or Exposure)

-It is the product of probability and impact.

S = P x I

P- The likelihood of occurrence (probability)

I- The potential effect on the project (impact)

S -The severity of an identified risk

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Probability/Impact Grid Example

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Explain Risk Ownership

Explain Risk Ownership

The project manager is responsible for ensuring an effective risk management process is in

place.

oThe Sponsor is responsible for ensuring the risk framework is implemented in accordance

with organisation wide policies.

The project manager may identify personnel best suited to dealing with particular risks Risk

Owner.

oBusiness related risks may be owned by the Project Sponsor

oSpecific risks may be owned by project stakeholders or members of the project team

Risk owners should work in partnership with the project manager

oThe risk owner should be the person best situated to manage the risk

The risk register should highlight ownership and any constraints such as cost, timeframe etc.

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