38 terms

Risk

STUDY
PLAY

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For Intergrated Methodology where does Risk fall?
Planning, and controlling
What deliverables are produced in the planning phase for risks?
Prepare risk management plan
- risk management plan
Identify Risks
- risk register
Perform quantative risk analysis
-risk register update
Plan risk response
- risk response plan
What deliverable are produced in the Controlling phase for risks?
Monitor and Control risk
-Organizational process asset update
-Performance Report
- Change Request
-Project document Update
What is a negative risk?
Negative risk involves understanding potential problems that might occur in the project and how they might impede project success

Negative risk management is like a form of insurance; it is an investment
What is a positive Risk?
Positive risks are risks that result in good things happening; sometimes called opportunities

A general definition of project risk is an uncertainty that can have a negative or positive effect on meeting project objectives

The goal of project risk management is to minimize potential negative risks while maximizing potential positive risks
What is risk utility?
amount of satisfaction or pleasure received from a potential payoff
- utility rises at a decreasing rate for people who are risk-averse
- those are risk-seeking have higher tolerance for risk and their satisfaction increases when more payoff is at stake
- the risk-neutral approach achieves a balance between risk and payoff
What is the risk management processes?
Risk management planning:
deciding how to approach and plan the risk management activities for the project

Risk identification:
determining which risks are likely to affect a project and documenting the characteristics of each

Qualitative risk analysis:
prioritizing risks based on their probability and impact of occurrence

Quantitative risk analysis:
numerically estimating the effects of risks on project objectives

Risk response planning:
taking steps to enhance opportunities and reduce threats to meeting project objectives

Risk monitoring and control:
monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project
What is risk management planning?
The main output of risk management planning is a risk management plan—a plan that documents the procedures for managing risk throughout a project

The project team should review project documents and understand the organization's and the sponsor's approaches to risk

The level of detail will vary with the needs of the project
what topics are adressed in risk management planning?
Methodology
Roles and responsibilities
Budget and schedule
Risk categories
Risk probability and impact
Risk documentation
What are contingecny plans?
Contingency plans are predefined actions that the project team will take if an identified risk event occurs
What are fallback plans?
developed for risks that have a high impact on meeting project objectives, and are put into effect if attempts to reduce the ris are not effective
What are contingency reserves or allowances?
provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level
What are some broad categories of risk?
Market risk
Financial Risk
Technology risk
People Risk
Structure/process risk
What is a risk breakdown structure?
A risk breakdown structure is a hierarchy of potential risk categories for a project

Similar to a work breakdown structure but used to identify and categorize risks
What is identifying risks?
Identifying risks is the process of understanding what potential events might hurt or enhance a particular project

Risk identification tools and techniques include:

Brainstorming

The Delphi Technique

Interviewing

SWOT analysis
What is brainstorming?
Brainstorming is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment

An experienced facilitator should run the brainstorming session
Be careful not to overuse or misuse brainstorming
Psychology literature shows that individuals produce a greater number of ideas working alone than they do through brainstorming in small, face-to-face groups
Group effects often inhibit idea generation
What is Delphi Technique?
The Delphi Technique is used to derive a consensus among a panel of experts who make predictions about future developments

Provides independent and anonymous input regarding future events

Uses repeated rounds of questioning and written responses and avoids the biasing effects possible in oral methods, such as brainstorming
What interviewing?
Interviewing is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions

Interviewing people with similar project experience is an important tool for identifying potential risks
What is SWOT Analysis?
SWOT analysis (strengths, weaknesses, opportunities, and threats) can also be used during risk identification

Helps identify the broad negative and positive risks that apply to a project
What is a risk register?
The main output of the risk identification process is a list of identified risks and other information needed to begin creating a risk register

A risk register is:

-A document that contains the results of various risk management processes and that is often displayed in a table or spreadsheet format

-A tool for documenting potential risk events and related information
What are risk events?
Risk events refer to specific, uncertain events that may occur to the detriment or enhancement of the project
What are the risk register contents?
An identification number for each risk event

A rank for each risk event

The name of each risk event

A description of each risk event

The category under which each risk event falls

The root cause of each risk
What are the risk registers?
Triggers for each risk; triggers are indicators or symptoms of actual risk events

Potential responses to each risk

The risk owner or person who will own or take responsibility for each risk

The probability and impact of each risk occurring

The status of each risk
What is qualitative risk analysis?
Assess the likelihood and impact of identified risks to determine their magnitude and priority

Risk quantification tools and techniques include:
-Probability/impact matrixes
-The Top Ten Risk Item Tracking
-Expert judgment
What is probability/impact matrix?
A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other

List the risks and then label each one as high, medium, or low in terms of its probability of occurrence and its impact if it did occur

Can also calculate risk factors
-Numbers that represent the overall risk of specific events based on their probability of occurring and the consequences to the project if they do occur
What is top ten risk item tracking?
Top Ten Risk Item Tracking is a qualitative risk analysis tool that helps to identify risks and maintain an awareness of risks throughout the life of a project

Establish a periodic review of the top ten project risk items

List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item
What is part of quantative risk analysis?
Decision trees & Expected Monetary Value (EVM)
Simulation
Sensitivity Analysis
What are deciscion tree and EVM
Diagramming technique to select the best course of action

Expected Monetary Value (EVM)
-EVM = (risk event probability) * (risk event monetary value)
What is stimulation in quantative analysis?
Uses a model of the system to analyze expected behavior or performance

Based on Monte Carlo analysis
Simulates outcomes many times based to generate statistical distribution of results
Name the steps for Monte Carlo Analysis
1. Assess range of variables
2. Determine probability distribution of each variable
3. For each variable, select a random value based on the probability distribution for the occurrence of the variable
4. Run a deterministic analysis (1 pass through) using a combination of the variables selected
5. Repeat steps 3 & 4 many times to generate the probability distribution of the model's results
1.Number of iterations depends on # of variables & # of degrees of confidence needed for the results (generally between 100 - 1000 runs)
What is sensitivity analysis?
used to examine how changes of one or more variables affect an outcome
What is planning risk responses?
After identifying and quantifying risks, you must decide how to respond to them

Four main response strategies for negative risks
Risk avoidance
Risk acceptance
Risk transference
Risk mitigation
What are some responses for strategies for positive risks?
Risk exploitation
Risk sharing
Risk enhancement
Risk acceptance
What are residual risks?
Residual risks are risks that remain after all of the response strategies have been implemented
What is a secondary risk?
Secondary risks are a direct result of implementing a risk response
What risks involved with monitoring and controlling
Involves executing the risk management process to respond to risk events

Workarounds are unplanned responses to risk events that must be done when there are no contingency plans

Main outputs of risk monitoring and control are:
-Risk register updates
-Organizational process assets updates
-Change requests
-Updates to the project management plan and other project documents
What are workarounds?
Workarounds are unplanned responses to risk events that must be done when there are no contingency plans
What are some results of good project risk management
Unlike crisis management, good project risk management often goes unnoticed

Well-run projects appear to be almost effortless, but a lot of work goes into running a project well

Project managers should strive to make their jobs look easy to reflect the results of well-run projects