Chapter 7

Question 1

What questions should be considered in risk management?

Answer 1

 What is likely to happen (the probability
and impact)?
 What can be done to minimize the
probability or impact of these events?
 What cues will signal the need for such
action (i.e., what clues should I actively
look for)?
 What are the likely outcomes of these
problems and my anticipated reaction?

Question 2

What is risk management?

Answer 2

Risk management – the art and science of
identifying, analyzing, and responding to
risk factors throughout the life of a project
and in the best interest of its objectives.
Project risk – an uncertain event or condition
that, if it occurs, has a positive or negative effect
on one or more project objectives such as scope,
schedule, cost, or quality.
Risk = (Probability of Event) * (Consequences of
Event)

Question 3

What are the four stages in risk management?

Answer 3

1. Risk identification
2. Analysis of probability and
   consequences
3. Risk mitigation strategies
4. Control and documentation

Question 4

What are some of the common risk clusters?

Answer 4

Financial
Technical
Commercial
 Execution
 Contractual or
legal risk
Common types of risks:
•	 Absenteeism
•	 Resignation
•	 Staff being pulled away by management
•	 Additional staff/skills not available
•	 Training not as effective as desired
•	 Initial specifications poor or incomplete
•	 Work or change orders multiplying due to various problems
•	 Enhancements taking longer than expected

Question 5

What are the methods available for risk identification?

Answer 5

Brainstorming meetings
Expert opinion
Past history
Multiple (or team based) assessments

Question 6

What is risk breakdown structure?

Answer 6

a source-oriented grouping of project risks that organises and defines the total risk exposure of the project
our goal is to create a hierarchical representation of the project’s risks, starting at the higher, general level and breaking the risks down to more specific risks at lower levels.

Question 7

Describe the process of analysis of probability and consequences?

Answer 7

1. Use project team’s consensus to determine the score
   for each Probability of Failure category: Maturity (Pm),
   Complexity (Pc), and Dependency (Pd).
2. Calculate overall probability: (Pm+Pc+Pd)/3
3. Use project team’s consensus to determine the score
   for each Consequence of Failure category: Cost (Cc),
   Schedule (Cs), Reliability (Cr), and Performance (Cp).
4. Calculate Cf by adding the four categories and dividing by 4
5. Calculate Overall Risk factor for the project by using the formula RF = Pf + Cf - (Pf)*(Cf)
   Rule of Thumb:
   Low Risk RF < 0.30
   Medium Risk RF = 0.30 to 0.70
   High Risk RF > 0.70

Question 8

What are some risk mitigation strategies?

Answer 8

Accept
Minimize
Share
Transfer
Contingency Reserves
Task contingency
Managerial contingency
Insurance
Other Mitigation Strategies
Mentoring
Cross training
Control and Documentation
Change management

Question 9

What is PRAM?

Answer 9

Project Risk Analysis & Management presents a generic methodology that can be applied to multiple project environments, and encompasses the key components of project risk management
Risk management follows a life cycle.
Risk management strategy changes
over the project life cycle.
Synthesized, coherent approach

Question 10

What are the nine phases of risk assessment?

Answer 10

1. Define
2. Focus
3. Identify
4. Structure
5. Clarify ownership of risks
6. Estimate
7. Evaluate
8. Plan
9. Manage