Section 11: Project Risk Management

Question 1

Levels of Risk

Answer 1

1 - Individual Project Risk
** individual risk events that could affect project objectives

2 - Overall Project Risk
** looks probability of risk and impacts at high-level

looking for risk exposure at both levels

• threats
• opportunities

Question 2

Non-Event Based Risk

Answer 2

• variability risks - uncertainty around an activity or decision
• fluctuations in productivity - number of errors/defects
• weather

Question 3

Risk Identification

Answer 3

**iterative activity that happens throughout the project

-identify and document risk events in RISK REGISTER

Ask questions about the problem:

• can you give examples
• can you talk me through the situation/show me the problem
• how many occurrences
• when it happens, what do you do
• if XYZ happens, what do you do

identify risk events vs. issues that already exists

use SWOT analysis

Question 4

Qualitative Risk Analysis

Answer 4

• high-level subjective approach of analyzing risks to determine if further analysis is needed — prioritize risks for further analysis
• assessment of probability of occurrence and impact
• focus on high-priority risks
• fast and quick

Question 5

Probability Impact Matrix

Answer 5

-look at each identified risk, judging probability and impact, and assign subjective risk score

Question 6

Bubble Chart

Answer 6

• probability on Y axis
• impact on X axis
• bubbles represent the risk score

Question 7

Quantitative Risk Analysis

Answer 7

• looks to quantify the probability and impact of the qualified risks from qualitative risk analysis
• goal is to find the expected monetary value
• takes more time so not all risks are analyzed
• based on the probability of outcomes that are uncertain

Question 8

Quantitative Risk Matrix or Probability-Impact Matrix

Answer 8

• use a cardinal scale i.e. a numbering scheme
• looking for risk exposure
• sum of risk exposure helps to identify the contingency reserve
• hedging our bets

Ex$V = expected monetary value
Probability x Impact = expected monetary value
Impact can be negative or positive
Complete for all risk events identified for quantitative analysis

Sum of Ex$V = Contingency Reserve

Question 9

Tolerance for Risk

Answer 9

Risks may have very high impacts

-stakeholder tolerance for risk determines risk responses

Question 10

Risk Responses / Strategies for Threats & Opportunities

Answer 10

Can be created for both Negative and Positive Risks

Negative Risk Responses
1- Escalate - beyond the PM’s power so escalate to management
2- Avoidance - too much probability so scope or plan is changed
3- Transference/Transfer - hire a professional to own the risk event
4- Mitigation - any action taken to reduce the probability or impact of risk event
5- Acceptance - live with it if it’s low probability or impact. some significant risks like laws or weather can’t be changed

Positive Risk Responses
1- Escalate - may still need to be escalated to manage
2- Exploiting - we know the risk will happen so PM does everything in their power to make it happen
3- Sharing - share or partner with someone else to take advantage of a positive risk
4- Enhancing - unsure if a risk will materialize so you try to make the conditions to encourage it to be a reality
5 - Accepting - do nothing