Lecture 6
Lecture 6
Evaluation
[MPM6133]
Lecture 6
Chapter 17
18 November 2021
RISK MANAGEMENT
3
Goals and Objectives
• Project Risk
• Risk Management
• Why Risk Management
• Risk Management Planning
• Identifying & Quantifying Risks
• Response Planning
• Risk Monitoring & Control
• Tools, Tricks and Helpful Links
4
Understanding Risk
What is Risk?
The effect of uncertainty on objectives.
Typically related to one of four areas:
1. Strategy
2. Change management
3. Operations
4. Finance
Risks can be positive, negative, or neutral.
Understanding Risk
9
Components of Risk
10
Components of Risk
Opportunities
Risk
12
Components of Risk
13
Nature of Risks
14
Risk Management
15
Risk Management Process
• Steps
✓ Risk Management Planning
✓ Risk Identification
✓ Qualitative/Quantitative Risk Analysis
✓ Risk Response Planning
✓ Risk Monitoring & Control
16
Value From Managing Risks
17
CERTAINTY, RISK, AND UNCERTAINTY
• Certainty
• Risk
• Uncertainty
18
Decision-Making under Certainty
19
Why Not Risk Management?
20
Risk Management Planning
21
Risk Management Planning
22
The Risk Management Process
• Risk identification
– Identify project, product and business risks;
• Risk analysis
– Assess the likelihood and consequences of these risks;
• Risk response planning
– Draw up plans to avoid or minimize the effects of the
risk;
• Risk monitoring
– Monitor the risks throughout the project;
23
The Risk Management Process
24
Identifying Risk
25
Identification Techniques
• Brainstorming
• Checklists
• Interviewing
• SWOT Analysis (strengths, weaknesses opportunities, threats)
• Delphi Technique (anonymous consensus building)
• Diagramming Techniques
– Cause & effect
– Flow Charts
– Influence Diagrams
26
Risks and Risk Types
27
Risk Analysis
28
Analyzing Risk - Qualitative
• Subjective
• Educated Guess
• High, Medium, Low
• Red, Yellow, Green
• 1-10
• Prioritized/Ranked list of ALL identified risks
• First step in risk analysis!
29
Risk Analysis - Quantitative
• Numerical/Statistical Analysis
• Determines probability of occurrence and consequences
of risks
• Should be focused to highest risks as determined by
Qualitative Risk Analysis and Risk Threshold
30
Risk Analysis (i)
31
Risk Analysis (ii)
32
Probability & Impact Analysis
33
Risk Response Planning
Risk Strategy
Organizational Prepare a briefing document for senior management
financial problems showing how the project is making a very important
contribution to the goals of the business.
Recruitment Alert customer of potential difficulties and the
problems possibility of delays, investigate outsourcing work.
Staff illness Reorganize team so that there is more overlap of work
and people therefore understand each other’s jobs.
Risk Management Strategies (ii)
Risk Strategy
Requirements Derive traceability information to assess requirements
changes change impact, and maximise information hiding in the
design.
Organizational Prepare a briefing document for senior management
restructuring showing how the project is making a very important
contribution to the goals of the business.
Database Investigate the possibility of buying a higher-
performance performance database.
Underestimated Investigate outsourcing components, investigate use of
development time a program generator
Risk Monitoring
• Tolerate
• Treat
• Transfer
• Terminate
Responding to Risks
Key Considerations
• Ensure normal business practices are not
interrupted.
• Managing the media should be part of your plan.
• Direct communication with stakeholders is critical.
• If there is any chance that people may be injured
or worse, you should
• Include medical support in your planning.
• You may be required by law to obtain insurance.
Resourcing Controls
✓ Self-certification
✓ Lessons learned