Lecture Project management in practice - Chapter 14: Project risk management

Lecture Project management in practice - Chapter 14: Project risk management, this chapter presents the following content: Risk event graph, risk management process, contingency funds and risk, risk monitoring and review,...

CHAPTER 14

Project Risk Management

Risk Event Graph

Risk Management Process

Risk Management

Process (cont.)

• Step 1: Establishing the risk context

• Step 2: Risk identification

• Step 3: Risk analysis

• Step 4: Risk evaluation

• Step 5: Risk treatment

Step 1: Establishing the

• Do you use the ‘As Low As

Reasonably Possible’ (ALARP)

approach?

Step 2: Risk Identification

Step 2: Risk Identification (cont.)

The Risk Breakdown Structure (RBS) 

Step3: Risk Analysis

• Probability refers to the

probability of the event (This is

otherwise known as the likelihood

of the risk occurring.)

• Impact refers to the impact of the event (This is otherwise known

as the consequence of the risk if the event occurs.)

Step 3: Risk Analysis

Simple ‘inherent’ risk analysis

Step 3: Risk Analysis (cont.)

I mpact considered over multiple criteria

Step 3: Risk Analysis (cont.)

Decision tree analysis

Step 4: Risk Evaluation

• The purpose of risk evaluation is to assist

in making decisions, based on the

outcomes of the risk analysis, about which risks need treatment and the priority for treatment implementation.

• Risk evaluation involves comparing the

level of risk found during the analysis

process with risk criteria established when the context was considered

• Based on this comparison, the need for

Step 5: Risk Treatment

for Threat Risks

Step 5: Risk Treatment (cont.)

Mitigation and residual risk assessment

Step 5: Risk Treatment

for Opportunity Risks

• Exploit

• Share

• Enhance

• Accept

Step 6: Contingency

Planning

A

contingency plan is an

alternative plan that will be used

if a possible foreseen risk event

becomes a reality (an issue)

Step 6: Contingency

Planning (cont.)

Risk contingency plan

Contingency Funds and

ow are risk contingencies

managed in your organisations?

Risk Management Plan

• Risk context

• Risk methodology

• Risk roles and responsibilities

• Risk escalation process

• Risk reporting

• Risk audits and health checks

• Lessons learned

Risk Monitoring and Review

risk breakdown structure (RBS) risk context

risk evaluation risk identification Risk Management Plan risk monitoring and review risk profile

Risk Register risk severity matrix