Risk Management is the art and science of identifying, assessing and responding to project risk through out the life of project and in the best interests of its objectives.
The process concerned with identifying, analyzing, and responding to uncertainty. It includes maximizing results of positive events and minimizing consequences of adverse events.
Risk Management is PRO-ACTIVE :
The potential for realization of an event that may affect the project for good or bad.
A factor, element or direction involving uncertain hazards
The term used to denote the probability of and event and its consequence
Risk and uncertainty are inherently present in all projects
Many time and cost over-runs are due to – unforeseen events – inappropriate accommodation for uncertain foreseen events
Projects are unique; data for calculation is usually insufficient; subjective judgment is usually required to assess probabilities
Subjective information is better than no information :
Risk Management Planning : Deciding how to approach and plan the risk mgt. Activities for a project
Risk Identification : Determining which risks might affect the project and documenting the their characteristic
Qualitative Risk Analysis: Performing a qualitative analysis of risks and conditions to prioritize the their effects on project objectives
Qualitative Risk Analysis: Measuring the prob. and consequences to enhance opportunities and reduce threats to the project objectives
Risk Response Planning :Developing procedures and tech. to enhance opportunities and reduce threats to project objectives
Risk Monitoring Control :Monitoring residual risks, identifying new risks, execution of risk reduction plans and evaluating the effectiveness throughout the project life cycle
Risk Management Goals :
Identify risk events or factors
Quantify potential impact of each event
Establish a baseline for project non-controllable elements... (I.e. What will you do if it happens?)
Exercise influence over project controllable elements... (I.e. What can you do to reduce the likelihood? The impact?)
Risk Components :
Risk Event – a discrete occurrence that may affect the project for better or worse
Risk Probability – How likely the event is to occur
Amount at Stake (Impact) – extent of loss or gain which could result
Expected Value – product of the outcome value and the probability
Uncertainity Means:
An uncommon state of nature, characterized by
the absence of any information related to a
desired out come.
How to Deal with Uncertainty
:
The relationship between uncertainty and information is inverse (by definition)
For the project manager, conditions of uncertainty (partial information) are the norm
Risk management increases the project manager’s knowledge of the decision situation in an environment of uncertainty
Types of Uncertainty :
The Risk Management Planning is the process of deciding how to approach and plan the risk management activities for a project.
It is important to plan for the risk management processes that follow to ensure that the level, type, and visibility of risk management are commensurate with both the risk and importance of the project to the organization.
Qualitative Risk Analysis :
Qualitative risk analysis is the process of assessing the impact and likelihood of identified risks.
This process prioritizes risks according to their potential effect on project objectives.
Qualitative risk analysis is one way to determine the importance of addressing specific risks and guiding risk responses.
The time-criticality of risk-related actions may magnify the importance of risk.
Qualitative risk analysis requires requires that the probability and consequences of the risks be evaluated using established qualitative-analysis methods and tools.
Quantitative Risk Analysis :
Aims to analyze numerically the probability of each risk and its
consequence on project objectives, as well as the extent of
overall project risk
This process uses techniques to:
Determine the probability
Quantify
Identify high contributing risks
Identify realistic and achievable Cost, Scope,sch…
