–Uncertain or chance events that planning can not overcome or control. •Risk Management
–A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a project’s success. •What can go wrong (risk event).
•How to minimize the risk event’s impact (consequences). •What can be done before an event occurs (anticipation).
•What to do when an event occurs (contingency plans).
Risk Management’s Benefits
•A proactive rather than reactive approach.
•Reduces surprises and negative consequences.
•Prepares the project manager to take advantage
of appropriate risks.
•Provides better control over the future.
•Improves chances of reaching project performance objectives within budget and on time. The Risk Management Process
Risk response development
Risk response control
•Step 1: Risk Identification
–Generate a list of possible risks through brainstorming, problem identification and risk profiling. •Macro risks first, then specific events
•Step 2: Risk Assessment
–Scenario analysis for event probability and impact
–Risk assessment matrix
–Failure Mode and Effects Analysis (FMEA)
•Decision trees, NPV, and PERT
Semiquantitative scenario an
•: Risk Response Development
•Reducing the likelihood an adverse event will occur.
•Reducing impact of adverse event.
•Changing the project plan to eliminate the risk or condition. –Transferring Risk
•Paying a premium to pass the risk to another party.
•Requiring Build-Own-Operate-Transfer (BOOT) provisions.
Making a conscious decision to accept the risk.
–An alternative plan that will be used if a possible foreseen risk event actually occurs. –A plan of actions that will reduce or mitigate the negative impact (consequences) of a risk event. •Risks of Not Having a Contingency Plan
–Having no plan may...