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Project Management > Lecture 10: Risk Management > Flashcards

Lecture 10: Risk Management Flashcards

1
Q

List four definitions of risk from the dictionary

A
  1. possibility of loss or injury: peril
  2. someone that creates a hazard

→ risk is something that might happen and if it will and it will have an impact

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2
Q

What is uncertainty? And what is its impact on a PJ?

A

Refers to unknown things when planning a major PJ. The unknowns could be either positive or negative.

→ lead to possible threats and opportunities:
-e.g. offshore pipe laying (bad weather can have bad impact, good weather can have good impact)
-if properly managed it can become a positive issue
→ is not only bad

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3
Q

Name difference between risk and uncertainty

A

Risk → outcome and its probabilities are certain

Uncertainty → either the outcome and/or its probabilities are uncertain

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4
Q

What are questions to consider in RM?

A
  • what is likely to happen (probabilty and impact)
  • what can be done to minimize these events
  • what cues will signal the need of such action
  • what are likly outcomes of there problems and my anticipated reaction
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5
Q

In whicht periods of an PJ are whicht risk most apparent?

A
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6
Q

List approaches to risks

A
  1. Crisis management
    - manage risk when they become issues and provide problems
  2. Error correction
    - manage risks prompty when they become issues
  3. Risk compensation
    - plan to mitigate risks if they should occur
  4. Prevention
    - implement mitigation actions to prevent risk occurrence
    1. Risk elimination
      • eliminate facotrs that could create risks
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7
Q

For which steps are the PM and the Support stuff responsible for?

A
  • identification, evalutation and monitoring risks
  • Determination, planning, allocation of PJ contingencies
  • generation of required reports
  • updating risk database
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8
Q

For which steps is the Risk assesor responsible for?

A
  • providing guidance, especially in the pre-bid and bid-phase
  • supervision of the correct appliaction of RiskM principles and methods
  • providing methods support to PM
  • Managing risk database
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9
Q

What are the stages of the RM process?

A
  1. Risk identification
  2. Analysis of probabilty and consequences
  3. Risk mitigation strategies
    1. Control and documentation
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10
Q

What are the objectives and inputs of risk identification

A
  • *Objectives:**
  • identify major sources of risk related to the PJ lifecycle
  • the key is a clear and common understanding of the sources of uncertainty
  • *Inputs:**
  • enterprise environmental factors (published info, commercial databases)
  • PJ scope statement
  • PJ management plan
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11
Q

List the main types of risks

A
  1. Financial
    - financial exposure a firm open when developing a PJ
    - relevant for large up-front capital PJ (construction, software development)
    - construction company without a contracted buyer prior to construction
  2. Technical
    - unique tech elements or unproven tech
    - new ways of working (process related)
  3. Commercial
    - PJ that have commercial goals, bu their success is not secure
  4. Execution
    - environment related (bad weather, volcano)
  5. Contractual/legal
    - ce
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12
Q

List some methods and techniques for risk identifikation

A
  1. Brainstorming
    - Brainstorming method
    - SWOT analysis (strength, weaknesses, opportunities, threats)
    - Diagramming tequniques
    - Chapman 6Ws
  2. Expert opinions
    - interviews
    - Delphi
  3. History
    - risk database
    - checklists
  4. Multiple (or team-based) assessments
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13
Q

What is the Cause-effect diagram?

A
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14
Q

List Chapman 6Ws

A
  • Who: who are the parties involved?
  • Why: what do the parties want to achieve?
  • What: what is the parties are interested in?
  • Which way: how is it to be done?
  • Wherewithal: what resources are required?
  • When: when does it have to be done?
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15
Q

Explain the methods from the expert opinion and its downside

A
  1. Interview
    - Open
    - Semi-structured
    - Structured (survey)
    1. Delphi approach
      • first indivdual
      • then group
      • (repeat)

→ expert opinion cost a lot of money

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16
Q

What are the uses of a risk database

A

-archive of risks in previuos PJ

-provides info about:
→information describing the risk
→data for evaluating/managing the risk

→ effective for repetitive PJ + good reference for new PJ

17
Q

What is the idea behind multiple (or team-based) assessments?

A

→ single sources may be to risky, because of biases

-Team based approach to risk idenfification offer a wider view on the topic
→ Look for diversity:
-age
-gender
-academic background
-nationality

18
Q

What is a risk register?

A

→ repository where outputs of RM are recorded

  • includes:
    1. person responsible for managing the risk
    2. probabilty, impact, risk score
    3. planned risk response
    4. info for understaning an individual risk
19
Q

What are objectives and main input for the “Analysis of probability and consequences”

A

→ evaluate impact of risk and opportunities in terms of:

  • what is the likelihood of occurrence
  • what is the impact of risks on performances

Main input:

  • prioritize risk
  • quantify potential effects
  • evalutate if and which action should be applied
  • define contingency policy
20
Q

LIst some qualitative anaylsis methods of risks

A
  • risk impact matrix (2x2 level)
  • 4x5 level
  • 5x5 level

-risk mapping

21
Q

What is qunatitative analysis of risk?

A

→ performed on certain risks that have been prioritized by qualitative analysis as critical

  • goal is to provide quantitative evaluation of risk likelihood and impact
    • often done by assuming certain distributions of uncertrainty

→ combining probability and impact to expected value

22
Q

What are the issues of quantative analysis?

A
  • modelling the probability
  • evaluating the impact
  • how to estimate risk at PJ level
23
Q

Why is it not useful to use deterministic modelling with single point “best guess”

A
  • wrong most of the time
  • unstructured → overlook or underestimate source of risks
  • affected by assessment biases
  • no consideration of “what if” scenarios and combined effect?
24
Q

What is the purpose of RM software (RMS)

A
  • helps decision making by modelling/simulating various scenarious
  • useful a PJ becomes more complex + competetive
  • useful for combining effekt of risk and uncertainty from one or more sources

BUT:
→ dont not change “real world”
→ does not predict future

25
Q

What is the difference between objective and subjetive risks?

A

Objective:
-probabilty distribution known in advance
→ can be describe precisely based on theory, experiment and common sense (coin flip)

Subjective:
-probabilty distribution unknown
-representing the probability can differ from person to person (bets or weather forecast)
→ subjective risk are very common in PM

26
Q

What are the main steps behind stochastic analysis & Monte Carlo Method

A
  1. observe real life
  2. build your model (excel)
  3. collect data
  4. use distributions
  5. sample from your distributions
  6. calculate and record results
  7. repeat step 5/6
    1. look at final result → statistical distributions
27
Q

What is the difference modelling & simulation

A

Modelling → process of describing project in a mathematical way

Simulation → process of imposing real-life complication on model and measuring the effects

28
Q

What is a stochastic process?

A

-a collection of random variables

→ used to represent the evolution of random value/system over time

→ many different outcomes are possible (difference to deterministic processes)

29
Q

What are the alternatives for risk mitigation and what is it?

A

→ can become a “project within the project”

  • past experience useful to identify potential actions
  • teamwork is essential
  • need ofr processes and alternatives in place

-all mitigation imply costs
→ allows to reduce potential cost by having certain cost

  1. Accept risk
  2. Minimize risk
  3. Share risk
    1. Transfer risk
30
Q

What is Accept risk about?

A

→ key question: “is risk sufficientyl strong that any action is warranted?”

-acceptable if likelyhood or impact is so small

31
Q

What is Minimize Risk about? + Project Example

A

→ reduce probabilty and/or impact by:

  • more standart tech
  • experienced suppliers/teams
  • reducing overlap phase
  • start construction with a complete design

Example: Boeeing is in continous contact with its suppliers, if a part is not safe, suppliers have to change it

32
Q

What is “Share Risk” about?

A

-risk are shared withing members of PJ

→ often done with contracts among suppliers

→ joint ventures, Public Private partnerships etc.

-comes from “skin in the game idea”
→ aircraft engineer tests his own plance first

33
Q

What is “Transfer Risk” about?

A

-shifts the risk to another partner
→ often includes payment ot a risk premium

-does not eliminate the risk

34
Q

What are strategies for positive risks?

A
  1. Exploit
    - increase the opportunity that a certain positive event occurse
    - assign more talented resources to a specific activity
  2. Share
    - allocating ownershipt to a third party, who is able to captur the opportunity for benefit
  3. Enhance
    - increase probability and/or positive impacts
    - target+reinforce triggering events

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