What are the Components of Risk?
By Abhilash Gopi
Risk has three components. These components need to be considered separately when determining on how to manage the risk
Risk Components are:
- The event that could occur – the risk,
- The probability that the event will occur – the likelihood,
- The impact or consequence of the event if it occurs – the penalty (the price you pay).
About Abhilash Gopi In his own words
I got smitten by the Project Management bug when I was working under K.U. Harsha, my first Project Manager and have been lucky since then to work under democratic managers (Purushottam Sitla, Rekha Varma). I could learn on-job from these wonderful managers and has been equally successful in applying these principles.
I am currently working as a Senior Test Manager with Cordiant Technologies, Kochi, India. Cordiant (www.cordiant.com) is an Offshore Product Development Services provider for ISVs and Web Startups and its innovation is spearheaded by our President & CEO, Dennis Paul. Read the Complete Article
What Is the Silver Lining for Projects?
By Marge Tam
The proverb “For every cloud there is a silver lining” can be interpreted as for every difficult situation there is some good to it. The proverb is of said to the person that would welcome such an encouragement during trying times, and the person is unable to see any positive way forward.
In the framework of Project Management, the Project Risk Management Process brings the silver lining to the uncertainties that come with managing anything that occurs in the future. Many people tie the word ‘risk’ with the negative connotation. However, according to the PMBOK, there are both negative and positive risks. The negative risk has potential impacts downstream to the overall health of the project projects such as project slip, budget overrun, and unsatisfied customers. While positive risks are essentially opportunities that brings about return on investment, increased revenue and overall process improvements. Read the Complete Article
How to Develop a Plan to Manage IT Risks
By Harry Hall
Want to know the secret to managing IT risks?
A Risk Management Plan.
So simple as to be, well, let’s say completely useless. Because if you knew the secret to consistently managing IT risks, you’d already be doing it, right?
But instead, you continue doing what you’ve always done with a gnawing apprehension that your worst nightmare is just around the corner. You are too busy to “add risk management” to your list of things to do.
The problem is that many CIOs – even the top-tier CIOs – lack an adequate grasp of their IT risks. Even these top dogs understand that they’re one event away from losing the farm. Which risks are greatest?
- Data security breach with reputational harm
- Regulatory risks
- Social media
- Recruiting and retaining qualified IT staff
- Improper balance of outsourcing
- Cloud technologies
- Transition to agile methods
- Disaster recovery
- Outdated operating systems
- Data on user-owned mobile devices
- Third-party risks
But there is a way to give you a better chance of not only surviving, but thriving in the face of great uncertainty. Read the Complete Article
Risk Management… The What, Why, and How
By Michael Stanleigh
What Is Risk Management?
Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives. Proper risk management implies control of possible future events and is proactive rather than reactive. For example:
An activity in a network requires that a new technology be developed. The schedule indicates six months for this activity, but the technical employees think that nine months is closer to the truth. If the project manager is proactive, the project team will develop a contingency plan right now. They will develop solutions to the problem of time before the project due date. However, if the project manager is reactive, then the team will do nothing until the problem actually occurs. The project will approach its six month deadline, many tasks will still be uncompleted and the project manager will react rapidly to the crisis, causing the team to lose valuable time. Read the Complete Article
Risk Management Within Your Project Management Process
By Cora Systems
Having a process in place to manage your projects is highly recommended as it gives project managers a set structure to work from. However no matter how tight this process is there is always the threat of something coming out of the woodwork and putting a halt to the project. Therefore it is highly advisable to include risk management in your project management process.
I have seen that by having a project management process which includes risk management will increase the chance of projects and programs being completed and implemented successfully. A well planned process needs to be flexible enough to handle the unexpected and ensure that a project is delivered on time and within budget. An organization that fails to include risk management into their project management process faces a possible threat to the success of the overall project.
Risk management should be discussed at the beginning when the project manager is drawing up the plan. Read the Complete Article
Project Management – Perform Qualitative Risk Analysis
By Timber Chinn, Northwest University
Once project risks are identified, they must be analyzed to determine how likely they are to actually happen and what impact they would have on the project. Qualitative risk analysis means assigning each risk a subjective factor related to how probable it is that the risk will occur and the level of impact that the risk would have if it did occur. The process is easy, quick and inexpensive. More extensive analysis can be accomplished through quantitative analysis which is described later in this book.
All risks are not equal, so qualifying them helps the project manager determine which risks require action, which should be closely monitored, and which can be ignored.For example, a human resources department tasked with hiring 20 highly-skilled employees in a two-month period of time faces several risks. One risk is that the hiring team will not be able to find enough candidates to fill the positions. Read the Complete Article
How to Determine the Probability of an Occurrence For the Risk You Face
By Glen D. Ford
Once you’ve identified a risk event, your task isn’t over. Risk management requires you not only to identify your risk but also to manage it. That means to spend money to avoid the risk event or enhance the risk event and also to spend money only where it is justified.
Knowing where to spend money avoiding, mitigating or otherwise requires you to determine the risk exposure of the event. Fortunately, risk exposure is simply the product of the probability or risk and the value of the event. Unfortunately that means you need to determine both the value associated with the event and the probability of the event. Both of which can be difficult to determine.
Determining the value of the event can be difficult and fraught with error. But ultimately, it is a matter of analysis. Read the Complete Article
A Risk Management Implementation
By Gary Hamilton, Gareth Byatt, and Jeff Hodgkinson
As program or project managers, we have our hands full with the day-to-day management of our initiatives, and it is difficult enough to keep a lid on all the tactical actions that are taking place, let alone plan for the future. Nonetheless, we all know that planning is a key element to success. Most successful program or project managers are effective because they simultaneously balance the immediate challenges and demands facing them with future needs, opportunities and risk-avoidance. In particular, they are able to do so because they identify and communicate these elements at the right levels throughout the organization. How do successful program and project managers remain successful in their day-to-day work while spending only the minimum amount of effort directed towards long term ends?
The focus of this article is a specific risk management strategy which we believe is simple to implement and can directly help to improve one’s ability to identify, manage, and effectively communicate risks. Read the Complete Article
How to Build ‘What-If’ Scenario Models
By David Blumhorst
I talk to clients and prospects on a weekly basis about “What-If” analysis; most of the time the conversation revolves around capacity, specifically having enough resources to execute work. Too often project managers keep their focus on the capacity problem. However, the problem they truly need to address is a portfolio problem, a demand management problem. This is true for every organization except those whose revenue is driven directly by their ability to meet the demand, such as professional services organizations.
When clients tell me they’re overworked, there’s a tendency is to focus on capacity issues first. The fundamental question then becomes, are you working on the right things? Although capacity is one of the common constraints in portfolio management, initiating planning exclusively to focus on managing capacity is fraught with errors. Organizations focused exclusively on workload have a tendency to manage resources at a micro level and that just isn’t sustainable. Read the Complete Article
Root Cause Analysis and Corrective Action for Project Managers
By Gary Hamilton, Gareth Byatt, Jeff Hodgkinson, and Duke Okes
Project managers have the immense task of juggling requirements and resources that are often not under their direct control in order to produce the required project deliverables within the limited constraints to which they must adhere (scope, time, quality, etc.). Even if the perfect project plan could be designed and executed, it would not remove all of the risks that could ultimately impact a project. Plans must inevitably change for one reason or another.
During the phases of a project, it could be said that there are three major activities focused on reducing project risk. The first risk reduction activity occurs during project planning, when a proactive risk assessment is conducted and the identified risks are either mitigated or avoided (e.g., by modifying the project plan), transferred (such as through insurance) or accepted (by doing nothing and accepting that “if it happens, it happens”). Read the Complete Article