Risk Management Flashcards
How would you manage risk on a project?
I manage risk by following a structured process:
Identify risks at an early stage through collaboration with the design team and stakeholders.
Develop and maintain a risk register, categorising risks by source (e.g. design, procurement, construction).
Assess the likelihood and impact of each risk and assign ownership.
Apply appropriate mitigation strategies (e.g. design changes, alternative procurement).
Monitor and update the register throughout the project lifecycle.
Allocate appropriate contingencies in the cost plan to cover residual risk.
What types of risk are there?
Risks can generally be categorised as:
Design Risk – e.g. incomplete or late design changes.
Construction Risk – e.g. ground conditions, health & safety.
Procurement Risk – e.g. delays in tendering, poor contractor performance.
Client Risk – e.g. scope changes or funding issues.
External Risk – e.g. market conditions, inflation, weather, Covid/Brexit.
Legal/Regulatory Risk – e.g. planning, building control changes.
Financial Risk – e.g. insolvency, currency fluctuations (for international projects).
What would you include in a risk register?
A risk register typically includes:
Risk description.
Category/type of risk.
Likelihood and impact rating (e.g. high/medium/low or scored numerically).
Financial quantification, if applicable.
Mitigation measures or contingency plans.
Risk owner – person or party responsible.
Status – open, ongoing, closed.
Review dates to keep the register current.
What risk quantification techniques you’re aware of?
Quantification techniques include:
Qualitative assessment – subjective scoring of likelihood and impact.
Quantitative assessment – assigning monetary values based on expected outcomes.
Expected Value Analysis (EVA) – multiplying the probability by cost impact.
Monte Carlo simulation – running thousands of simulations to model probability distributions.
Contingency allocation models, often tied to project risk profile or % of contract value.
What is the Monte Carlo?
The Monte Carlo simulation is a quantitative risk analysis tool that:
Uses probability distributions to model uncertainty.
Runs thousands of simulated scenarios to predict the range and likelihood of outcomes.
Outputs results in the form of S-curves, giving confidence levels (e.g. P80 cost = 80% chance cost will not be exceeded).
Often used in large or complex projects to forecast cost or programme risk.
It’s used in conjunction with software like @Risk or Primavera Risk Analysis.
What is the Pareto Analysis?
Pareto Analysis is a risk prioritisation technique based on the 80/20 principle:
Suggests that 80% of the impact comes from 20% of the risks.
Helps teams focus effort on the few high-impact risks that matter most.
Often visualised using a Pareto chart, ranking risks from highest to lowest impact.
It is useful during the early stages of risk management to allocate resources effectively
What is a decision tree analysis?
Decision tree analysis in risk management uses a flowchart-like structure to evaluate potential outcomes and risks associated with different choices, helping decision-makers make informed decisions by visualizing and quantifying potential consequence
How did you quantify the risk?
Calculated it by the EMV
EMV = probability x cost impact
