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Risk Management Strategies, Tools, and Techniques

Risk Management Strategies, Tools, and Techniques
By Kathie York

This essay is an excerpt from an assignment for the Assessing and Managing Project Risk course in my Master of Science in Project Management program. The tasks for this question were:

Describe, compare, contrast, and fully analyze the various strategies and tools/techniques for each of the six PMBOK risk management processes (for both negative and positive risks)

(In this document, negative risks are “risks.” Positive risks are “opportunities.”)

The six PMBOK risk processes are (from Chapter 11 of the Fourth Edition PMBOK):

  • 11.1 Plan Risk Management
  • 11.2 Identify Risks
  • 11.3 Perform Qualitative Risk Analysis
  • 11.4 Perform Quantitative Risk Analysis
  • 11.5 Plan Risk Responses
  • 11.6 Monitor and Control Risks

11.1 Plan Risk Management

The Risk Management Plan (RMP) is an overview of the entire risk process, initiated at the beginning of a project. It is usually completed during the planning phase. The project manager (PM), and other stakeholders as necessary to this project, help develop the plan. Read the Complete Article

Risk Planning in Project Management

Risk Planning in Project Management
By Keith MathisPM Expert Live

When taking on any endeavor, you have to be prepared for the inevitable risk that will arise. No project ever runs perfectly. Snags will arise. You need to be prepared for what you will do when the time comes or, even better, you need to know how to prevent as many hurdles as possible.

A risk is any uncertain event or condition that may take place. All risks have a cause and a consequence. However, not all risks are negative. Some risks may be an opportunity. There are six processes to follow when planning and managing risk.

Risk Management Planning

According to the A Guide to the Project Management Body of Knowledge – 3rd Edition (PMBOK®), “risk management planning is the process of deciding how to approach and plan the risk management activities for a project.” Whether you decide to identify risks before the project begins or in the middle, a Risk Management Plan should be drafted. Read the Complete Article

Managing Project Risks

Managing Project Risks (#28 in the Hut Introduction to Project Management)
By JISC infoNet

All projects bring with them an element of risk. In the best-planned projects there are uncertainties and unexpected events can always occur for example project staff might leave unexpectedly, the budget might suddenly be cut or a fire or theft might affect the project progress. The majority of risks are however related to the fact that your plan is based on estimates and they are therefore manageable. Risk management is a mechanism to help you to predict and deal with events that might prevent project outcomes being delivered on time.

Risk management is probably the single most important part of project management.

Identifying Project Risks

You will undertake an initial risk assessment as part of starting up the project. Basically you are asking the questions:

  • What could possibly happen to affect the project?
  • What is the likelihood of this happening?
Read the Complete Article

Project Risk and Risk Management

Project Risk and Risk Management
By David Litten

Whenever we undertake a project, risk is inevitable, since projects enable change – and whenever you have change, it introduces uncertainty and hence risk.

A risk is defined as an uncertain event which should it occur, will have an effect on the project meeting its objectives. These uncertain events can be positive in which case it would be called an Opportunity, when negative it is called a Threat. Both have the common thread of uncertainty.

When carrying out risk management, the purpose is to reduce the probability and impact of threats and to increase the probability of opportunities and/or their positive impact. It is helpful to consider that risk is “an event that may all may not occur in the future, but if it does occur it will have an impact on the project objectives“.

The Business Case will contain information weighing project cost and risk against the business benefits. Read the Complete Article

Risk Identification in Software Projects

Risk Identification in Software Projects
By Dave Nielsen

Threats to software development projects are often minimized or overlooked altogether because they are not as tangible as risks to projects in other industries. The risks are there though and just as capable of derailing the software development project as a project in any other industry.

Most project managers in the information field have had the experience of planning a software development project down to the last detail, planning the effort for each of the tasks in the plan down to the last hour and then having some unforeseen issue come along that derails the project and makes it impossible to deliver on time, or with the feature set originally envisioned.

Successful project managers in any industry must also be skillful risk managers. Indeed, the insurance industry has formalized the position of risk manager. To successfully manage the risks to your software development project, you first must identify those risks. Read the Complete Article

Working Towards Success: How to Keep the Project Afloat

Working Towards Success: How to Keep the Project Afloat
By André Augusto Choma

To keep the project ‘afloat’ isn’t, certainly, an easy job. It requires extraordinary dedication from the project manager and his/her team; and success comes much more because of competence than chance. And that’s why, to succeed, the project manager’s attitude is an essential element in keeping the team constantly mobilized to deal with these risks. The project manager can’t prevent a storm from hitting his project, but he can anticipate its consequences, and in that way, prepare his/her team to withstand it.

How then, do we face the previously identified risks?

a) The generic scope: never think that defining the scope with the client is a waste of time! The scope is the starting point for all project “time and cost” estimates; the client will check all deliverables and accept the final outcome only once he has matched them against the original project scope. Read the Complete Article

Risk Response

Risk Response (#6 in the series How To Effectively Manage Project Risks)
By Michael D. Taylor

Risks may be viewed as negative or positive. Negative risks are those that might impact the ability to reach project goals. Positive risks are those that can be exploited, as opportunities, for positive benefits.

Responses to negative risks may include the following:

Transfer the risk. PMBOK describes this as a risk transference that requires shifting the negative impact of a threat to another party. Buying fire insurance is an example of risk transference. If the insured house is destroyed by fire, the impact falls on the insurance company, not the owner.

Avoid the risk. Changing the scope, schedule, or available resources of a project may result in risk avoidance. Other risks may be avoided by relaxing or clarifying product requirements, obtaining additional information, or bringing in more skilled personnel.

Reduce the risk. If risks cannot be completely avoided they may be reduced (mitigated) by the same means as avoidance but having a lesser effectiveness. Read the Complete Article

Quantitative Risk Analysis

Quantitative Risk Analysis (#5 in the series How To Effectively Manage Project Risks)
By Michael D. Taylor

Once the qualitative assessments of project risks are completed, the estimates can be examined to determine the magnitude of the risks. A technique that not only considers risk probability and risk consequence but also takes into account the project priorities is the “weighted risk factor (WRF)” technique. For each sets of project risks a WRF is calculated as follows:

WRF=W1*RFTECH+W2*RFSCHED+W3*RFCOST

Where:

  • “RF” means Risk Factor1 = (P+C) – (P x C), where P stands for Risk Probability, and C stands for Risk Consequence.
  • The value for weight (W) is dependent upon its project priority within the triple constraint.
  • W1, W2, and W3 are valued 0 through 1.0 depending on the priorities of the project, and together must sum to 1.0.

A completed WRF table might look like the following.

Weighted Risk Factor (WRF) Example

Weighted Risk Factor (WRF) Example

The question facing the risk management team is what to do with the results. Read the Complete Article

Project Risk Management – An Analogy

Project Risk Management – An Analogy
By Xiaoming Wang

In terms of project management theory, risk management in a project can be defined into three main activities:

  • Risk assessment and analysis
  • Risk reduction and monitoring
  • Risk management process and methodology

It might be difficult to understand the boring theory, thus a real-life example will prove very helpful.

Imagine, you and your partner plan to have dinner in a fancy restaurant on the Fifth Revenue for your three year anniversary. Basically, you need go through the following steps in order to make your wife/husband happy.

  • Find the phone number of the restaurant
  • Call the number and book the table
  • Go to the restaurant
  • Order
  • Eat, drink, talk, eye contact, and etc…
  • Pay

In the above steps, if everything is going well, brilliant! However, as you know anything could go wrong in real life, and you cannot know beforehand. Such as “the number is wrong”, “no table available”, “huge traffic preventing you from getting there”, “the restaurant did not reserve your table”, “you/your partner are not happy with the dishes”, “they do not accept a credit card or your credit card does not work”, etc… There are many of them. Read the Complete Article

Project and Risk Management Life Cycles

Project and Risk Management Life Cycles
By Tom Carlos (PMP)

The Risk Management Life Cycle is comprised of the following:

Risk Planning Life Cycle

  • Preliminary Risk Management Plan is implemented in the Project Initiating Phase
  • Approved Risk Management Plan is implemented in the Project Planning Phase
  • Updating the Risk Management Plan is implemented through the rest of the Project Life Cycle

Risk Identification and Response Planning

  • Done at regular intervals, throughout the entire project life cycle
    • When changes are made to the deliverables, project plan, or the baseline(s)
    • Upon completion of major milestones or schedule check points

Risk Monitoring and Control

  • Done at regular intervals, throughout the entire project life cycle
    • In Reports, Status Meetings, Executive Briefings
    • In Quality Control Reviews

Tom Carlos has over 20 years of cumulative experience in business, technical, and training environments. He is a Certified Project Management Professional (PMP) and member of the Sacramento Valley PMI Chapter. Read the Complete Article

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