Risk

Management

Dr. Mohamed Abdel Ghany

FCIArb, PhD, MSc, REA
Project Management Director
About ACE
Resources

62
Years of Experience

38
Countries in the World

12 1700
Registered Branches Qualified
Professionals

2
About ACE
Global Representation

Africa Gambia Morocco Swaziland GCC & Kuwait Saudi Arabia Asia Europe
Algeria Ghana Mozambique Tanzania Middle East Lebanon Syria Afghanistan Albania
Burkina Faso Kenya Rwanda Uganda Bahrain Oman UAE Bangladesh Kosovo
Chad Malawi Senegal Zambia Iraq Palestine Yemen Indonesia UK
Ethiopia Mauritania Sudan Jordan Qatar Kyrgyzstan

3
About ACE
Project Disciplines

Commercial Treatment & Power Plants Industrial

Metro Lines & Tunnels Roads & Bridges Airports

Residential Hotels Sports Complexes

4
About ACE
Professional Specialization

Project
Management
Quality Management

Cost Management & Control

Site
Supervision ACE Development
Management Planning & Time Management

Contracts & Claims Management

Risk Management
Design

Value Engineering

5
What is a “Project” ?

6
 a “Project” is a temporary endeavor
undertaken (has a progressive
elaboration characteristics) to create a
unique product, service, or result.

7
What is “Project Management” ?

8
 Project Management (PM) is
The application of knowledge, skills, tools, and techniques
to project activities to meet the project requirements.

Managing a Project includes:

• (Identifying) requirements
• (Establishing) clear and achievable objectives
• (Balancing) the competing demands for quality, scope,
time, and cost
• (Adapting) the specifications, plans, and approach to the
different concerns and expectations of the various
stakeholders

9
What is a “Project Risk” ?

10
WHAT IS PROJECT RISK ?

• Is an calculated uncertain event or condition .

• If it occurs, has a positive or a negative effect on at

least one project objective, such as time, cost,
scope, or quality.

• A Risk may have one or more causes and, if it

occurs, one or more impacts.

11
• The word “RISK” is Quite Modern,
• It was appeared in the English Language in mid
17th century, coming from the French Word
“Risqué”.
• In the second quarter of 18th century it appeared in
the insurance transactions.
• In the late of 19th century it appeared in the
construction industry

12
Risk and Project Management

13
Risk and Project Management
• Managing risks an integral part of good management
and fundamental of achieving good business and
project outcomes and effective procurement of goods
and services ;

• Risk should be considered at the earliest stages of

project planning;

• It is important for the project sponsor, the main

contractor and the sub-contractors where relevant to
use an effective and consistent risk management
process
14
Risk and Project Management (Cont’d)

• Process should promote transparency and

effective communication between the parties to
facilitate effective and expeditious management of
risks

• There are three keys to managing project and

procurement risks effectively.

15
Risk and Project Management (Cont’d)

1. Identifying, analyzing and assessing risks early and

systematically and developing plans for handling
them ;

2. Allocating responsibilities to the party best placed

to manage risks;

3. Ensuring that the costs incurred in reducing risks

are commensurate with the importance of the
project and the risk involved.
16
Risk and Project Management (Cont’d)

The scope of risk management for a project

includes risks associated with the overall
business, approach and concept, the design
and delivery of the project, transition into
services and the detailed operation and
processing activities of the delivered asset or
capability

17
Risk and Project Management (Cont’d)
• Business risks include all those risks that might impact
on the viability of the enterprise, including market,
industry, technology, economic and financial factors,
governmental and political influences ;

• Project risks include all those risks that might impact

on the cost, schedule or quality of the project;

• Operation and processing risks include all those risks

that might impact on the design, procurement,
construction , commissioning, operation and
maintenance activities including major hazard and
catastrophic events.

18
Risk Management

19
Project Risk Management
• Is a process aims to have attitudes about risk to be made explicit
wherever possible.

• A consistent approach to risk to meet the organization’s

requirements should be developed for each project, and
communication about risk and its handling should be open and
honest.

• Risk responses reflect an organization’s perceived balance

between risk-taking and risk avoidance.

• To be successful, the organization should be committed to

addressing the management of risk proactively and consistently
throughout the project.

20
Objective of Project Risk Management

Increase the Probability

and Impact of positive
events

Decrease the Probability

and Impact of negative
events

21
Importance of Risk Management

22
Importance of Risk Management

• For Managers, because it improves the basis for

making decision to meet operational requirements
and achieve project and program objectives;

• For Project Staff, because it helps to identify things

that can go wrong in the project process and offers
ways to address them effectively;

• For End Users, because it contributes to satisfying

needs and achieving the value of money in acquiring
major assets and capabilities;
23
Importance of Risk Management (Cont’d)

• For Suppliers and Contractors, because a sensible

approach to risk in projects leads to better planning
and better outcomes for sellers as well buyers;

• For financiers, who must ensure they obtain a

financial reward commensurate with the risk
involved ; and

• For Insurers, who require comfort that risks are

being managed carefully within the project prior to
determining whether and how much to charge for
financing residual risks

24
Benefit of Risk Management

25
Benefit of Risk Management

1. Minimize the risks of not achieving the objectives of

the project and stakeholders and take advantage of
opportunities ;

2. Facilitate better business and project outcomes;

3. Provide insight, knowledge and confidence for

better decision making; and

4. Increase certainty and reduce overall risk exposure;

26
Project Risk Management Process

27
Project Risk Management Process

1. Risk Management Planning

2. Establishing the Context

3. Risk Identification

4. Qualitative Risk analysis

5. Quantitative Risk Analysis

6. Risk Response Planning

7. Risk Monitoring and Control

28
Project Risk Management Process
1. Risk Management Planning.
• Deciding how to approach, plan, and execute the risk
management activities for a project

2. Establishing The Context.

• Concerned with developing a structure for the risk identification
and assessment tasks

3. Risk Identification.
• Determining which risks might affect the project and
documenting their characteristics.

4. Qualitative Risk Analysis.

• Prioritizing risks for subsequent further analysis or action

29
Project Risk Management Process
5. Quantitative Risk Analysis.
Numerically analyzing the effect on overall project objectives of
identified risks.

6. Risk Response Planning

Developing options and actions to enhance opportunities, and to
reduce threats to project objectives.

7. Risk Monitoring and control

Tracking identified risks, monitoring residual risks, identifying new
risks, executing risks response plans, and evaluating their
effectiveness throughout the project life cycle

30
In this session …

1. Risk Management Planning

2. Establishing the Context

3. Risk Identification

4. Qualitative Risk analysis

5. Quantitative Risk Analysis

6. Risk Response Planning

7. Risk Monitoring and Control

31
In this session …

1. Risk Management Planning

2. Establishing the Context

3. Risk Identification

4. Qualitative Risk analysis

5. Quantitative Risk Analysis

6. Risk Response Planning

7. Risk Monitoring and Control

32
Qualitative Risk Analysis

33
What are the possible risks for the following
projects?

34
What are the possible risks for the following
projects?

35
What are the possible risks for the following
projects?

Akashi Kaikyo Bridge, Japan. The largest suspension bridge in the world
36
Qualitative Risk Analysis

Definition:-
As soon as Risks are identified as explained
previously whether by stake holders (during
establishing the context phase) OR by Risk
identification techniques (during Risk
Identification Phase), and list of potential
project Risks is in hand

The next step is to analyze and prioritize them

37
Qualitative Risk Analysis (Cont’d)

• Based on the carried out analysis; an

appropriate and adequate response plan(s)
is generated.

• At the end of the qualitative Risk analysis we

shall be able to identify the Risk magnitude
“subjectively” based on the two factors
• Probability (Likelihood)
• Impact (Consequence)

38
 WHEN QUALITATIVE RISK ANALYSIS IS
CARRIED OUT ?

AT PROJECT EARLY STAGES

39
 WHY WE HAVE TO RE-COURSE TO QUALITATIVE
RISK ANALYSIS ?

Because at the early stages of the project we may

face the problem of lack of information which will
prevent us from being able to identify “Risk
Magnitude” by numbers “Objectively”

40
Tools for Qualitative Risk Analysis

1. Historical information.

2. Techniques previously used for Risk

identification (Brainstorming, Delphi,
Diagramming…etc).

3. Matrix Method (Setting Matrix) , also called

probability(likelihood)-impact
(Consequence) method
41
Tools for Qualitative Risk Analysis

• Q1: HOW FREQUENTLY THIS TYPE OF RISK

OCCURRED DURING LAST PROJECTS
(Probability)?

&

• Q2: WHAT WAS ITS IMPACT ON PROJECT

WHEN OCCURRED (Impact) ?
42
 Tools for Qualitative Risk Analysis

• Risk’s Probability • Risk’s Impact

(Likelihood):-
– Very High (Almost Certain)
– High (Likely)
– Moderate (Possible)
– Low (Unlikely)
– Very Low (Rare)
(Consequence):-
– Very High (Catastrophic)
– High (Major)
– Moderate (Moderate)
– Low (Minor)
– Very Low (Insignificant)

43
Probability (Likelihood Description)

44
Impact (Consequence Description)

45
Impact (Consequence Description) (Cont’d)

46
Risk Priority Rating

47
Probability-Impact Matrix

48
Probability-Impact Matrix

49
Probability-Impact Matrix (Cont’d)

• For example:
– Low probability
– High impact

• For example:
– High probability
– High impact

50
Qualitative Risk Analysis (Cont’d)

51
Qualitative Risk Analysis (Cont’d)
Five Regions Colored Matrix identifying Risk Zones

52
Qualitative Risk Analysis (Cont’d)
Five Points Scale Matrix

53
Semi Quantitative Risk Analysis

54
Qualitative Risk Analysis (Cont’d)
Non Linear Point System

55
Qualitative Risk Analysis (Cont’d)
Non Linear Scale

56
Thank you
Dr. Eng. Mohamed Abdel Ghany
FCIArb, PhD, MSc, REA

57