4.5 Risk and Issue Management

Question 1

Definition of risk

Answer 1

Potential of a situation or event to impact on the achievement of objectives (both positive (opportunities) and negative (threat))

Question 2

Stages of risk management process

Answer 2

• Identification
• Analysis
• Monitoring
• Response
• Closure

Question 3

Threat responses in a risk management process

Answer 3

• Avoid
• Reduce
• Transfer
• Accept

Question 4

Opportunity responses in a risk management process

Answer 4

• Exploit
• Enhance
• Share
• Reject

Question 5

Considerations of the ‘Identification’ stage of a risk management process

Answer 5

• Identify in workshops, interviews, checklists, assumptions
• Unique ID, description, category, impact, probability, owner
• Team and PM involved and own the process

Question 6

Considerations of the ‘Analysis’ stage of a risk management process

Answer 6

• Quantitative - specific measurable metrics, monte carlo, decision trees and sensitivity analysis
• Qualitative - subjective statements
• Impact and probability
• Impact based on log scale to highlight importance
• Priority number / severity is impact x probability
• Clear measure of risk exposure

Question 7

Considerations of ‘Response’ stage of risk management process

Answer 7

• Set actions and contingencies
• Actions recorded as part of project plan
• Contingency set aside to deal with known risk
• Owners responsible for actions
• Plan for dealing with risks as they mature
• Different responses for threats and opportunities

Question 8

Considerations of ‘Closure’ stage in risk management process

Answer 8

• Terminate the risk when it no longer has opportunity to appear
• Risk register only handed over in transition
• Stakeholders informed of risk exposure
• Frees up contingencies
• Helps inform future projects
• Signifies risks no longer need attention

Question 9

Risk management in linear lifecycle

Answer 9

• Primary identification at outset
• Regular risk reviews to add new risks
• Contingencies established at outset as part of PMP

Question 10

Risk management in iterative lifecycle

Answer 10

• Ongoing risk identification as scope gets definition
• Contingencies assessed as needed

Question 11

Definition and features of contingency

Answer 11

• Additional time or budget to deal with consequences of risks
• Accounts for uncertainty from estimations
• Contingency plan - what to do if risk matures
• Contingency budget - how much time / budget available to deal with risks maturing
• Time added as extra float to activities
• Budget used to add resources
• Contingency owned by sponsoring organisation

Question 12

Definition and features of unknown unknowns

Answer 12

• Management reserve to deal with completely unexpected situations
• QSRA (quantitative schedule risk assessment)

Question 13

Benefits of risk management

Answer 13

• Clearly defined roles and responsibilities ensure proactive action
• Accurate contingencies available without overburdening sponsoring organisational
• Assist informed decision making
• Improved stakeholder confidence
• Culture of success to allow more risk in the future
• Staff morale improves
• Products produced more effectively

Question 14

Definition and features of issues

Answer 14

• A problem breaching tolerances
• Requires sponsor support to resolve
• Not recognising issues allow impact to grow
• Failing to track leads to no record or lessons learnt
• Losing ownership of actions means PM has more to fix

Question 15

Stages of Issues Management

Answer 15

• Identification
• Escalation
• Assign actions
• Change control
• Close

Question 16

Benefits of issue management

Answer 16

• Clearly defined roles ensure actions followed
• Morale improves as issues dealt with
• Products produced more effectively
• Project team more likely to be proactive in risk management
• Capacity to deal with issues following defined processes

Question 17

Governance in risk and issue management

Answer 17

• Linked to risk management
• Risk and issue management process part of governance
• Governance and assurance gives stakeholders confidence in risks being managed
• Standardised approach helps streamline actions
• PMO may have risk / issues specialists
• Governance ensures entire organisation benefits from best practice
• Informed decision making
• Transparency and accountability
• Stakeholder communications in meaningful way
• Continuous improvement relies on explicit processes