essentials of risk management

8/13/2019 Essentials of Risk Management

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Risky Business

Avneet Mathur (PMP)

[email protected]

Essentials of Risk Management


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What is a Project? A project is a temporary endeavor undertaken to

produce a unique product or service

TemporaryDefinitive beginning and end UniqueNew undertaking, unfamiliar ground

Temporary UniqueCharacteristics ofProjects


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Risk RISK can be defined as the threat or probability that

an action or event, will adversely or beneficially affectan organization's ability to achieve its objectives*.

In simple terms risk is Uncertainty of Outcome,either from pursuing a future positive opportunity, or

an existing negative threat in trying to achieve acurrent objective.

* Luhmann 1996:3


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Issue vs. Risk

TODAY FUTURE

ISSUE RISK


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Issue vs. Risk

If not fixed today, task stops If not identified, may become issue later

ISSUE RISK

Issue already impacting

the cost, time or quality

Risk POTENTIAL negative

impact to project


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Whats the Plan?

Identification Quantification Response

Monitoring

and Control


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Identification Risk Types

Business (risk to overall business)

Delivery (risk to project delivery)

Technical (specific to particular technology)

Cause Impact

Vendor not meeting deadline Budget will be exceeded

"The vendor not meeting deadline will mean that budget will be exceeded"


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QuantificationRisk

LikelihoodImpact


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QuantificationTitle Score Description

Very low 20

20 Highly unlikely to occur based on current information, as the circumstances likely to trigger the risk

are also unlikely to occur.

Low 40

Unlikely to occur. However needs to be monitored as certain circumstances could result in this risk

becoming more likely to occur during the project.

Medium 60 Likely to occur as it is clear that the risk may eventuate.

High 80 Very likely to occur, based on the circumstances of the project.

Very High 100

Highly likely to occur as the circumstances that will cause this risk to eventuate are also very likely to

eventuate

Title Score Description Impact *

Very low 20 Insignificant impact on the project. -

Low 40 Minor impact on the project. < 5%

Medium 60 Measurable impact on the project. 5 - 10 %

High 80 Significant impact on the project. 10 - 25 %

Very high 100 Major impact on the project. > 25%

* Deviation in scope, scheduled end-date or project budget

IMPACT

LIKELIHOOD


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Quantification

Priority = [Likelihood + Impact]

------------------------------

2

Priority Score Priority Rating Priority Color-----------------------------------------------------------------------020 Very Low Black2140 Low Green

4160 Medium Yellow6180 High Orange81100 Very High Red

Risk ID Likelihood Impact Priority Rating

1.1 20 80 50 Medium

1.2 80 60 70 High

1.3 100 40 70 High

2.1 40 20 30 Low

2.2 90 100 95 Very High

2.3 20 80 50 Medium


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Response

Risk ID Rating Preventive Actions

Action

Resource

Action

Date

Contingent

Actions

Action

Resource

Action

Date

2.2 Very High Clearly identify the

expected business

benefits

Project sponsor DDMMYY Measure the actual

business benefits

achieved by the

project

Project

Manager

DDMMYY

2.3 High All requirements need

to be well defined.

Project sponsor DDMMYY Stakeholders need to

sign-off on the

requirements.

Project

Manager

DDMMYY

Address risks rated based on severity . Very-High-rated risks warrant thehighest priority, and should be addressed before the less severe classes of risks,and should be tracked until they can be downgraded.

Create a Risk Schedule to address these risks.

In a risk schedule, for every risk identified, preventive actions are listed thatare required to reduce the likelihood of the risk occurring, as well as thecontingent actions needed to reduce the impact to the project should the riskoccur.


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Monitoring and Control Continually monitor risks to identify any change in the

status, or if they turn into an issue.

Hold regular risk reviews To identify actions outstanding, risk probability and impact

Remove risks that have passed

Identify new risks


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Case Study

Buying a Used Car online Requirements

Buy a car over the internet

Price less than $15,000

Reliable

Specific make and model

Mileage


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Case Study

Buying a Used Car online Sample Risks

Buy a car over the internet Most people would say dont! to eliminate the risk, but this is a requirement

Websites that do not have good ratings

Price less than $15,000 Owner may increase price or add additional cost after finalizing the deal.

Hidden cost

Reliable Does not need frequent repairs

Does not breakdown

Good brand Specific make and model

Not getting the same model after finalizing the car

Mileage Odometer rollback


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Case Study

Buying a Used Car online Risk Quantification

Buy a car over the internet Websites that do not have good ratings

Price less than $15,000 Owner may increase price or add additional cost after finalizing the deal.

Hidden cost

ID Likelihood Impact Priority

1.1 40 60 (40+60)/2 = 50


2.1 20 40 (20+40)/2 = 30

Medium

Low


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Case Study


Reliable Does not need frequent repairs

Does not breakdown

Good brand

Specific make and model Not getting the same model after finalizing the car


3.1 60 100 (60+100)/2 = 80

3.2 20 80 (20+80)/2 = 50

3.3 40 80 (40+80) /2 = 60


4.1 20 40 (20+40)/2 = 30

High

Medium

Medium

Low


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Case Study


Mileage Odometer rollback


5.1 80 80 (80+80)/2 = 80 High


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Case Study

Buying a Used Car online Risk Response

Risk ID Rating Preventive Actions

Action

Resource

Action

Date

Contingent

Actions

Action

Resource

Action

Date5.1 High Get a Car Fax report

and check mileage

history

Project sponsor DDMMYY Avoid cars with no car

fax history.

Project

Manager

DDMMYY

1.1 Medium Check website rating

before initiating a

purchase

Project sponsor DDMMYY Avoid suspicious

websites or too good

to be true deals.

Project

Manager

DDMMYY


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Summary Risk management is a project management tool for handling events

that might adversely impact the project, thereby increasing thelikelihood of success.

A sound process like this removes the uncertainty and empowers theproject manager to complete their project within schedule and withinbudget.

Asses Risk

Identify Risk Analyze Risk Prioritize Risk

Control Risk

Mitigate Risk Control Risk Measure Risk


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About the Author

Avneet Mathuris a Certified Project Management Professional,

as awarded by the Project Management Institute, USA and has

been involved in IT for more than a decade.

He holds an MBA in General Business Administration, with an

additional Master's Degree in Computer Science and

Networking from University of Missouri, Kansas City. He also

has a Bachelor's Degree in Computer Science from theAurangabad University, India. He can be reached at

[email protected]
mailto:[email protected]:[email protected]


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About Project PerfectProject Perfect is a project management software consulting

and training organisation based in Sydney Australia. Theirfocus is to provide organisations with the project

infrastructure they need to successfully manage projects.Project Perfect sell Project Administrator software, which is

a tool to assist organisations better manage project risks,issues, budgets, scope, documentation planning and

scheduling. They also created a technique for gatheringrequirements called Method H, and sell software tosupport the technique. For more information on Projecttools or Project Management visit

www.projectperfect.com.au
http://www.projectperfect.com.au/http://www.projectperfect.com.au/

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