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BSYS603 Project Management > (06) Managing Risk > Flashcards

(06) Managing Risk Flashcards

1
Q

What is Project Risk?

A

Project risk is an uncertain event or condition that, if it occurs, has positive or negative effects on a project objective.

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2
Q

What does Project Risk consist of?

A

Cause and, if it occurs, a consequence.

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3
Q

What are the forms of project risk to different people?

A
  • Different people and varies according to viewpoints and experience.
    - Engineers, designers and contractors view risk from the technological
    perspective
    - Lenders and developers tend to view it from the economic and
    financial side
    - Health professionals, environmentalists, chemical engineers take a safety and environmental perspective.
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4
Q

What are the risk categories?

A
  • Technical Risks.
    • Schedule Risks.
    • Costs Risks.
    • Funding Risks.
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5
Q

What is a Technical Risk?

A

If chosen technology fails.

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6
Q

What are Schedule Risks?

A
  • Use of slack increases the risk of a late project finish.
  • Imposed duration dates – i.e., absolute project finish date.
  • Compression of project schedules due to a shortened project duration date.
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7
Q

What are Costs Risks?

A
  • Costs increase when problems take longer to solve than expected.
  • A rise in input costs if the duration of a project is increased.
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8
Q

What are Funding Risks?

A

Changes in the supply of funds for the project can dramatically affect the successful completion of a project.

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9
Q

What are the most common project risks?

A
  • Cost risk.
  • Schedule risk.
  • Performance risk.
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10
Q

What is cost risk?

A

Typically escalation of project costs due to poor cost estimating accuracy and scope creep.

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11
Q

What is schedule risk?

A
  • The risk that activities will take longer than expected.
  • Slippages in schedule typically increase costs and, also, delay the receipt of project benefits, with a possible loss of competitive advantage.
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12
Q

What is performance risk?

A

The risk that the project will fail to produce results consistent with project specifications.

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13
Q

What are other further risk types?

A
  • Governance risk.
    • Strategic risks.
    • Operational risk.
    • Market risks.
    • Legal risks.
    • Risks associated with external hazards.
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14
Q

What are governance risks?

A

Relates to board and management performance with regard to ethics, community stewardship, and company reputation.

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15
Q

What are strategic risks?

A

Result from errors in strategy, such as choosing a technology that can’t be made to work.

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16
Q

What are operational risks?

A

Includes risks from poor implementation and process problems such as procurement, production, and distribution.

17
Q

What are market risks?

A

Include competition, foreign exchange, and interest rate risk, as well as liquidity and credit risks.

18
Q

What are legal risks?

A

Arise from legal and regulatory obligations, including contract risks and litigation brought against the organisation.

19
Q

What are risks associated with external hazards?

A

Including storms, floods, and earthquakes; vandalism, sabotage, and terrorism; labor strikes; and civil unrest.

20
Q

What is Risk Management?

A

A proactive attempt to recognise and manage internal events and external threats that affect the likelihood of a project’s success.

21
Q

What are the benefits (of risk management)?

A
  • A proactive approach.
    • Reduces surprises and negative consequences.
    • Provides better control over the future.
    • Improves chances of reaching project performance objectives within budget and on time.
22
Q

What are the steps of Risk Management Process?

A
  1. Risk identification.
  2. Risk assessment.
  3. Risk response development.
  4. Risk response control.
23
Q

What occurs during Risk identification?

A
  • Analyse the project to identify sources of risk.

- Generate a list of possible risks through brainstorming, problem identification and risk profiling:

24
Q

What factors can be considered when generating a list of possible risks through brainstorming, problem identification and risk profiling?

A
  • Macro risks first, then specific risks.
  • Focus on risks that could cause negative consequences.
  • Use the WBS to check the risk events.
  • Common Techniques.
  • Personal experience.
  • Group processes.
  • Brainstorming.
  • Nominal Group Technique.
  • Delphi Technique.
  • Structured interviews.
  • Project information.
  • Checklist/prompt list.
  • Risk Breakdown Structure.
25
Q

What occurs during Risk assessment?

A
  • Assess risks in terms of severity of impact, likelihood of occurring and controllability.
  • Identify the most important risks.
  • Scenario analysis.
  • Techniques.
  • Risk assessment matrix.
  • Probability analysis: Decision trees.
  • Semi quantitative scenario analysis.
26
Q

What are the stages in developing a strategy to reduce possible damage?

A
  1. Mitigating risk.
  2. Transferring risk.
  3. Avoiding risk.
  4. Sharing risk.
  5. Retaining risk.
27
Q

What is Mitigating risk?

A

Reducing the likelihood and/or impact of adverse event.

28
Q

What is Transferring risk?

A

Paying a premium to pass the risk to another party.

29
Q

What is Avoiding risk?

A

Changing the project plan to eliminate the risk or condition.

30
Q

What is Sharing risk?

A

Allocating risk to different parties.

31
Q

What is Retaining risk?

A

Making a conscious decision to accept the risk.

32
Q

What is Risk response development?

A
  • Develop a strategy to reduce possible damage.

- Develop contingency plans.

33
Q

What is a contingency plan?

A

A set of predefined actions that will reduce or mitigate the consequences of a risk event.

34
Q

What happens if we don’t have a contingency plan?

A
  • Slow response.
  • Dangerous and costly decisions made under pressure.
  • Additional plans.
  • Fallback plans.
  • Contingency plans of last resort.
  • Contingency reserves.
  • Funds to mitigate cost or schedule overruns.
35
Q

What is Risk response control?

A
  • Implement risk response strategy.
  • Initiate contingency plans.
  • Monitor and adjust plan for new risks and triggering events.
  • Watching for new risks.
  • Establishing a change management control process.
  • The Change Control Process.
36
Q

What occurs in the Change Control Process?

A
  • Identify proposed changes.
  • List expected effects of proposed changes on schedule and budget.
  • Review, evaluate and approve or disapprove of changes formally
  • Negotiate and resolve conflicts of change, condition and cost.
  • Communicate changes to parties affected.
  • Assign responsibility for implementing change.
  • Adjust master schedule and budget.
  • Track all changes that are to be implemented.

BSYS603 Project Management (12 decks)

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