2/20/2016

RiskManagement:Howtomanageyourprojectriskeffectively

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ProjectRiskManagement
May13,2014
PMP,Quantifyingrisks,RiskIdentification,RiskManagement,Riskmonitoring,Riskresponse

RiskManagementOverview
Thereisnoprojectortechniquethatis100%riskfree.Riskinunavoidablewhenwetakeprojects.Howeveritisthe
responsibilityoftheprojectmanagertoensurethatrisksarereducedtoaminimum.Withaproperriskmanagement
inplacetheriskscanbemonitoredandcontrolled.

Therearebroadlyfourstagesofriskmanagement:
RiskIdentification
Quantifyingrisks
Riskresponse
Riskmonitoringandcontrol

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RiskManagement:Howtomanageyourprojectriskeffectively

Classicexamplesofpoorriskmanagementleadingtoprojectfailures
1.LufthansaSystemsGermanyAirlineTicketreservationSystemcancelledafter2years.Althoughlittle
informationwasavailable,themajorreasonwascitedtobepoorfeasibilitystudyandbadriskmanagement
2.LosAngelesUnifiedSchoolDistrictNewpayrollsystemgoeswrong.Someteachersarepaid$10000forone
monthsworkwhileothersarepaid20cents
Reasoncitedwasdifficultyincleaningthelegacydataandpoortrainingofthesystem
3.QantasAustralianAirlineFailuretoengagetheengineersinrequirementgatheringandtestingofthesystem
Jetsmartthenewengineeringpartssystemledtoasystemthatwasunusablebytheengineers
Inalltheseexampleseithertheriskswerenotidentifiedorwerenotproperlymonitoredandcontrolled.Failurein
anypartoftheriskmanagementcyclecanmakethesystemunusable.

RiskFactors
Probabilityofoccurrence
Rangeofoutcome
Timingofoccurrence
Frequencyoftheriskevent

RiskManagementPlan
Ariskmanagementplancomprisesofthefollowing:
Roles,responsibilitiesandmethodology
Classificationofrisks
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Probabilityofrisksandimpact
Reportingofrisksandrisktracking

Typesofrisksinprojects
Therearebasicallyfourtypesofrisksinprojectmanagement
ScoperiskThisincludeschangesinscopeoftheprojectduetochangesincomplexityorchangesindependency
oranyhardwareorsoftwarechanges
SchedulingriskThisincludesdelaysduetoschedulingissueslikevendordelays,errorinestimationordelayin
acquisition.Acommonmethodofavoidingschedulingrisksisbycriticalpathmethod
ResourceissuesThisincludesrisksduetooutsourcingandpersonnelrelatedissues.Acommonresourceriskis
attritionrisks.Availabilityoffundscanalsobeanissue.Anotherareawhichneedstheattentionoftheproject
managerisoutsourcingbecauseitisnotunderthedirectpurviewoftheprojectmanager.
TechnologyrisksThisincludesrisksarisingoutofhardwareorsoftwarefailureorduetooutdatingofthe
hardwareandsoftware.

RiskIdentificationtechniquesforProjectManagement
Informationgatheringtechniques
BrainstormingHerealotofthinkinggoesamongtheteammemberstoidentifythepossiblerisks
DelphitechniqueHereaquestionnaireisdistributedtotheexpertsandtheirresponseiscollected.Theprocessis
theniteratedseveraltimessothataconsensusofopinionisreached.
RootcauseAnalysisHereaproblemisidentified,thecauseisanalysedandactionistakensothattheproblem
doesnotoccurinfuture.
ChecklistAnalysisHereachecklistismadeofallthepossibleproblemsthatmayoccurandcareistakensothat
wepreventtherisk
SWOTASWOTanalysishelpsustofocustheriskidentificationonthestrengthsandweaknessoftheprojectas
wellasopportunitiesandthreats.
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InfluencediagramsAninfluenceisavisualrepresentationofadecisionproblem.Influencediagramshelpto
identifythedecisions,uncertaintiesandobjectivesandhowtheyinfluenceeachother.

Exampleofaninfluencediagramforaproductdecision

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Source:smartdraw
FishbonediagramAlsoknownascauseandeffectdiagramitisoneofthecommonlyusedmethodforrisk
identification.InthismethodthevariouscausesofaproblemarecategorisedunderPeople,machine,environment,
measuresandmethodscategory.Veryusefulforprojectofallkinds

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source:salesperformance
TheabovediagramshowstheriskmanagementusingfishbonediagramforSalesandMarketingbusiness
ProbabilityImpactMatrixItisaqualitativemethodofriskidentification.Inthismethod.Itcategorisestherisk
andanditsimpactbasedontheprobabilityoftheoccurrenceoftherisk

Probability
Rare
Unlikely
Moderate
Likely
Verylikely

Impact
Veryless

Minor

Moderate

Major

Catastrophic

Low

Low

Low

Medium

Medium

Low

Low

Medium

Medium

Medium

Low

Medium

Medium

Medium

High

Medium

Medium

Medium

High

High

Medium

Medium

High

High

High

Theriskswhichhavehighimpactandhighprobabilityofoccurrencearehighlightednred.Theyaretheonesthat
shouldbemoreemphasizedon.Allriskswhichfallintheredzonearetheonethatareunacceptable.Risksinyellow
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zonearetheonesthatcanbetackled.Risksingreenzonearetheonesthatwillleastbotherus

ExpectedvaluemethodItsaquantitativemethodofriskidentificationandriskanalysis.Inthismethodthe
expectedvalueofthedecisiontreealternativesisusedtoarriveatadecision.

EMVofdecision1=100009000=1000
EMVofdecision2=32008000=4800
Hencechoosedecision1

RiskResponse
TheProcessofdevelopingactiontoenhanceopportunitiesandtoreducethethreatiscalledRiskResponse.
Thefollowingthingbroadlyencompassriskresponse:
Strategiesfornegativerisks
Strategiesforpositiveopportunities
ContingencyPlan

Strategiesforthreatsarebasically:
Eliminatethethreat
Transferthethreattoathirdparty
Reducethethreat
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Strategiesforopportunitiesare:
Ensurethattheopportunitiesdefinitelyhappen
Ensurethattheprobabilityorimpactoftheopportunitiesincrease

RiskMonitoringandControl
Thepurposesofriskmonitoringandcontrolare:
Monitoringexistingrisks
Identifyingnewrisks
Implementingriskresponseplans
Toseeofariskcanberetired
Auditofriskmanagementpolicy
Sothisishowyoumustideallymanagerisksforyourprojectinordertomakeitsuccessful.Incaseofanydoubtsor
queries,kindlygetbacktous.
RelatedLinksyouwilllike

SMARTGOALSFORPROJECTMANAGEMENT

TIPSFOREFFECTIVEPROJECTMEETINGS

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Comments

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Top comments

Piyush Shah 1 week ago - Shared publicly

Interesting article....
1 Reply

Ambuj Atreya shared this via Google+ 5 months ago - Shared publicly

1 Reply

Enilde Silva Lima 7 months ago - Shared publicly

Before..!?
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RiskManagement:Howtomanageyourprojectriskeffectively
1 Reply

Linda Bradley via Google+ 11 months ago (edited) - Shared publicly

Identify and kill the risks involved in project Management before they kill your project.
http://bit.ly/1FkYwpq
1 Reply

Aurangzeb Khan 5 months ago - Shared publicly

Excellent
presentation with so many valuable information for betterment.
Thank you very much.
1 Reply

Suryaprakash Vuppaladhadyam Rathnam 6 months ago - Shared publicly

Excellent
presentation. It is exhaustive and informative.
Thanks
1 Reply

victor osmar mencia lezcano 7 months ago - Shared publicly

Excelente articulo sobre la GESTION DE RIESGOS en un PROYECTO
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1 Reply

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