Risk Management

Question 1

quantitative vs. qualitative risk

Answer 1

quantitative - delay of days, budget increase

qualitative - low, medium, high

• qualitative first, quantitative if appropriate
  
  • Qualitative analysis may be enough to show a risk is either acceptable or unacceptable

Question 2

pro-actively minimising the probability and impact of risks, leads to …

Answer 2

• increases opportunity
• improves supplier negotiation
• better scheduling and budgeting
• clearly defined ownership for each risk
• less stressful environment

Question 3

when does risk management occur in the project cycle

Answer 3

• During the initiation the risks are identified
• Output is a risk management plan

Question 4

What does the risk management plan contain?

Answer 4

• Criteria for acceptability and tolerability (score board)
• Risk register
• Internal and external interfaces

Question 5

What does the risk management plan require to start with?

Answer 5

• project needs to be well defined
• corporate risk policies may be followed

Question 6

Techniques for risk identification

Answer 6

Document extensitvely and Review

• Assumption analysis
• Other project documentation (inside or outside the organisation)

Ask people

• Team (kick-off meeting, brainstorming)
• Interviews with stakeholders, questionnaires
• Delphi technique

Tools

• SWOT analysis
• Cause Effect Analysis

Question 7

What is the Delphi Technique + pros and cons?

Answer 7

asking a panel of experts successively

a method of group decision-making and forecasting that involves successively collating the judgments of experts

Benefits

• Can be done “remotely”
• Final position is agreed

Limitations

• Need good experts
• Time-consuming
• Needs a good facilitator

Question 8

Cause & Effect Analysis / Fishbone Diagram / Ishikawa Diagram

Answer 8

• Finds root cause and expose common risk areas
• Diagrams can help show the thinking
• Useful (facilitated) group activity

Question 9

Articulating risks

Answer 9

A. An [external event] occurs, …

B. because [interacting with an aspect of the project], which …

C. causes a significant [effect] on the objectives.

• Sentences like this can be managed
• Vague risk descriptions just cause fear, doubt, etc.
• Use such sentences for assessment and in risk register

Question 10

Assessing risks structurally

Answer 10

• risk events linked?
• shared root causes?
• Can risks be combined / single response strategy?
• Use project network to identify risk interdependence

Question 11

Assessing risks owership-wise

Answer 11

• Who is responsible for managing the risk?
  
  • including further evaluation/response strategy
• Particular importance is whether customer or supplier is responsible
  
  • will be reflected in contractual requirements
• Responsibility may be changed at response strategy stage (if good response, less risk)

Question 12

one qualitative risk assessment technique

Answer 12

​Probability-Impact Matrix

Question 13

P-I Matrix: assigning scores for each scale point

Answer 13

• probability score grows in an arithmetic scale (+2)
• impact score grows in an geometric scale (x2)
  
  • this emphasises the relevance of the impact.

Low probability, high impact risks are more relevant than risks with high probability and low impact.

Question 14

Type of Risk:

Answer 14

• Requirements
• Technical
• Resource
• Information
• Supplier

Question 15

Look for concentration of risk in particular area(s), like …

Answer 15

• Time / Cost / Quality
• PBS / WBS / OBS
• Requirements/Technical/Resource/Information/Supplier

Question 16

planning responses

Answer 16

• Identify options (treatment strategies)
  
  • should be SMART
  • consider effect on project objectives
• Cost / Benefit evaluation
• Prepare action plans
• Finalise and agree risk owner

Question 17

What are threats and what to do with them?

Answer 17

Threats are risks with adverse consequences

may have more than one treatment for each risk

• Accept – do nothing (if very low risk)
• Avoid – change or abandon goals, processes or activities and replace with alternatives that remove the risk (e.g., exchange material used).
• Reduce probability – look at cause / effect analysis and take action.
• Reduce impact – develop plans for responding to the threat if it occurs (recovery plan).
• Share or transfer – share risks in part or full with another stakeholder. For example, passing back time / cost overrun risks to a contractor (see Procurement session, contract pricing methods); taking out insurance against fire, theft, loss, damage, etc.

Question 18

What are opportunities and how to handle them?

Answer 18

Opportunities are risks with positive consequences

tendency to focus on threats

• Reject – may be too small or too large to be worth exploiting.
• Exploit – change the project scope to take advantage of the opportunity should the event come to pass (e.g., market research shows interest in an additional product).

Question 19

What is a Risk Register / Risk Log

when is it created

+ characteristics

+ example layout

Answer 19

Key output of risk management process

• A summary of all risks and their status
• continually reviewed
• Full version of register prepared at definition phase

Question 20

Implementation Response

Answer 20

• Ensure risk owner takes responsibility for actions
• Establish contingency fund (money set aside for risks)

Question 21

risk vs. issue

Answer 21

• risks = what might happen
• issues = what is happening

risks become issues if the “risk event” happens

Question 22

Issue management process

(5 phases)

Answer 22

Definition: How are issues going to be managed throughout the project?

• How issues will be raised and managed, and the process of escalation of issues to the next managerial level.

Identification: What is the issue and what is its impact?

• Issue Log
  
  • Who has raised the issue and when
  • What the impact of the issue is on the project’s goals
  • Who is responsible for resolving the issue
  • What has been done to resolve it, and the date it has been resolved

Escalation: Who has responsibility for resolving the issue?

Monitoring and reporting: what is happening to resolve the issue?

• Keep updating issue log.

Resolution: how has the issue been resolved?

• Issues may be resolved in a number of ways:
  
  • change to objectives in terms time, cost, or quality
  • the project schedule may be changed to cope with availability of resources
  • further activities may be generated