Level 2 - Risk Management

Question 1

Define Risk

Answer 1

• Likelihood of an event occurring and its consequential impact
• Uncertain events

Question 2

Define Issue

Answer 2

• Relevant event that has happened, was not planned and required immediate attention

Question 3

What are the stages of risk management?

Answer 3

1. Identify
2. Analyse
3. Respond
4. Monitor

Question 4

What are the risk response strategies?

Answer 4

• Sharing
• Transfer
• Avoidance
• Reduction
• Retention

Question 5

Risk management categories?

Answer 5

• External – uncontrollable
• External – Influenceable
• Internal – Controllable (client)
• Internal – Controllable (user)
• Internal – Controllable (project)

Question 6

What is a risk register and what is its purpose?

Answer 6

• Document highlighting all known project risks
• Qualitative and quantitative
• Used to monitor and track risks at regular intervals to enable best possible chance of mitigation

Question 7

What actions can be taken to minimise risk at project outset?

Answer 7

• Detailed client brief
• Procurement route selection
• Surveys
• Correct project team and contractor selection
• TDD studies

Question 8

What is a qualitative assessment?

Answer 8

• Prioritise risks for importance
• Don’t cost them
• Likelihood of occurrence and magnitude (high, low, medium)
• Severity rating = likelihood of occurrence x impact

Question 9

What quantification methods are you aware of?

Answer 9

Monte Carlo

• Computer simulation used to model outcomes
• Models a number of potential risks occurring in a number of different combinations, looks at the most likely outcome based on this and the most appropriate risk allowance which should be included for the project on that’s basis
• 90% certainty of completion for less than £xxx

Central limit theorem

• Mathematical method to provide 90% confidence on contingency allowance

Simple method

• Cost assigned to risks in register along with probability
• Cost x probability

Probabilistic

• Best / likely / worst case (probabilities =100%)
• More detailed version of simple method
• Expected value per assumption

Fault tree analysis

• Deductive approach to determining causes of risk
• Start with top undesired event and work back

Event tree analysis

• Possible outcome from initial event

Percentage addition

• OCE

Question 10

How can you advise a client in terms of protection should a contractor become insolvent?

Answer 10

• Collateral warranties
• Bonds
• PCG
• Insurance
• Termination

Question 11

What were the key risks you advised on MatchesFashion?

Answer 11

• Inflated labour costs (OOH working)
• Site coordination issues with PC resulting in delays
• Fast flowing request for change by wider business
• Contingency levels

Question 12

What should be included on a monthly risk report?

Answer 12

• Most serious risks
• Planned responses
• Pans to reduce, transfer, risks where undesirable

Question 13

What are the factors affecting procurement route choice?

Answer 13

• Client type
• Risk appetite
• Time available
• Cost certainty
• Design development
• Specialist input
• BIM
• Complexity of works
• Change accommodation
• Contract administration