Risk Mitigation Strategy Development 7 1 Risk management

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Risk Mitigation Strategy Development 7 -1

Risk Mitigation Strategy Development 7 -1

Risk management - the art and science of identifying, analyzing, and responding to risk

Risk management - the art and science of identifying, analyzing, and responding to risk factors throughout the life of a project and in the best interest of its objectives. Project risk – any possible event that can negatively affect the viability of a project 7 -2

Risk Vs Amount at Stake Total Project Life Cycle Plan Phase 2 Develop (D)

Risk Vs Amount at Stake Total Project Life Cycle Plan Phase 2 Develop (D) Phase 3 Execute (E) Phase 4 Finish (F) Period of highest risk impact Opportunity and risk $ Value Increasing Risk Phase 1 Conceive (C) Produce act p m sk i i dr e n i b Com Amount at stake Time 7 -3

Process of Risk Management • What is likely to happen? • What can be

Process of Risk Management • What is likely to happen? • What can be done? • What are the warning signs? • What are the likely outcomes? Project Risk = (Probability of Event)(Consequences of Event) 7 -4

Four Stages of Risk Management 1. Risk identification 2. Analysis of probability and consequences

Four Stages of Risk Management 1. Risk identification 2. Analysis of probability and consequences 3. Risk mitigation strategies 4. Control and documentation 7 -5

Risk Clusters • Financial • Technical • Contractual/Legal Common Types • Absenteeism • Resignation

Risk Clusters • Financial • Technical • Contractual/Legal Common Types • Absenteeism • Resignation • Staff pulled away • Time overruns • • • Commercial Execution Skills unavailable Ineffective Training Specs incomplete Change orders 7 -6

Risk Factor Identification Ø Brainstorming meetings Ø Expert opinion Ø Past history Ø Multiple

Risk Factor Identification Ø Brainstorming meetings Ø Expert opinion Ø Past history Ø Multiple (or team based) assessments 7 -7

Risk Impact Matrix Consequences High Likelihood Low 7 -8

Risk Impact Matrix Consequences High Likelihood Low 7 -8

Project Risk Scoring 1. Identify factors and assess the probability (Pf ) and consequences

Project Risk Scoring 1. Identify factors and assess the probability (Pf ) and consequences (Cf) of failure 2. Calculate overall probability & consequence 3. Calculate overall risk factor 7 -9

Risk Mitigation Strategies • Accept • Minimize • Share • Transfer • Contingency Reserves

Risk Mitigation Strategies • Accept • Minimize • Share • Transfer • Contingency Reserves – Task contingency – Managerial contingency • Mentoring • Cross training 7 -10

Control & Documentation Help managers classify and codify risks, responses, and outcomes Change management

Control & Documentation Help managers classify and codify risks, responses, and outcomes Change management report system answers • What? • Who? • When? • Why? • How? 7 -11

Project Risk Analysis & Management Extends risk management over project’s life cycle Key Features

Project Risk Analysis & Management Extends risk management over project’s life cycle Key Features of PRAM q. Risk management follows a life cycle q. Risk management strategy changes over the project life cycle q. Synthesized, coherent approach 7 -12

Nine Phases of Risk Assessment 1. Define 2. Focus 3. Identify 4. Structure 5.

Nine Phases of Risk Assessment 1. Define 2. Focus 3. Identify 4. Structure 5. Clarify ownership of risks 6. Estimate 7. Evaluate 8. Plan 9. Manage 7 -13

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