Project Risk Management

A Discussion on
Project Risk Management

Led By
NK Shrivastava, PMP
nk@swmopmi.org
June 15, 2010

Agenda
What is a Risk? Understanding Risk Why Manage Project Risks? PMIs Practice Standard for Risk Management Risk Management Process Communicating Risks Q&A

What is a Risk? What picture comes to your mind when you hear the word Risk?

What is a Risk?
Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project's objectives.
- From PMI's Practice Standard for Project Risk Management - Chapter2 , Page 9
More on Risks
Risk Synonyms Risk Antonyms
accident, contingency, certainty, safety, sureness, danger, exposedness, surety exposure, flyer, fortuity, fortune, gamble, hazard, header, jeopardy, liability, liableness, luck, openness, opportunity, peril, plunge, possibility, prospect, shot in the dark, speculation, stab*, uncertainty, venture, wager
Source : http://thesaurus.com/browse/risk

Is it necessary to manage project risks? Yes, Absolutely
Why? To increase predictability To improve probability of success
PMIs Practice Standard For

Principles of Specialization
Processes
Handbooks
Textbooks
Courses
Theory Tools/ Techniques

Status Check
1. 2. 3. 4. 5. 6. What is a Risk? Understanding Risk Why Manage Project Risks? PMIs Practice Standard for Risk Management Risk Management Process Communicating Risks Q&A
Risk Management Process
Risk Management Process

Plan Risk Management
Identify Risks
Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis
Plan Risk Responses
Monitor and Control Risks

Tailored Process Risk Thresholds Process Rules Risk Mgt Plan
Identify Risks
Plan Risk Responses
Risk Identification
List of risks Risk Owners
Identify Risks
Plan Risk Responses
Risk Qualitative Analysis

Probability Impact Root Causes Importance Prioritized List
Identify Risks
Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis
Plan Risk Responses
Risk Quantitative Analysis

Identify Risks
Numerical models Combined Outcomes Confidence limits Sensitivity analysis Prioritized list updates
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis

Plan Risk Responses
Plan Risk Responses

Identify Risks
Strategies Actions Action Owners Timing Analysis Project plan updates
Plan Risk Responses
Monitor & Control Risks

Identify Risks
Plan Risk Responses
Status & Trends Reporting Trends in risk exposure
Monitor & Control Risks

Status Check
1. 2. 3. 4. 5. 6. What is a Risk? Understanding Risk Why Manage Project Risks? PMIs Practice Standard for Risk Management Risk Management Process Communicating Risks Q&A
Communicating Risks
Risk Behavior Over Time

108.95 108.95
Total Risk Magnitude
79.75
80.45
42.95
39.25
39.25
39.25
39.25
39.25
39.25
11
13
13
12
12
12
12
12
12
12
12
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Risk Magnitude
# of Risks
Risk Impact on the Project

Status Check
What is a Risk? Understanding Risk Why Manage Project Risks? PMIs Practice Standard for Risk Management Risk Management Process Communicating Risks Q&A

Summary
Risk is an uncertain event, that if occurs, may impact project objectives in positive or negative manner. It is extremely important to manage project risks to reduce uncertainty PMIs six step Project Risk Management Process How to communicate Risks? Thru pictures/graphs

Status Check
Risk Identification Tool
Historical Review
Project
Creativity Technique
Past
Present
Future
Risk Monitoring & Control
Project Management Plan Risk Register
Risk Response Monitoring

Status Reviews
Additional risk information Major project events
Audits
Trigger conditions
Risk Response Control

Invoke contingency plans Perform additional risk identification, analysis & response planning
Stakeholder Communications Lessons Learned
Integrated Change Control

Updates
Risk Identification Example

Id Risk Description Event Date
1 Performance issues due to redesign of batch (splitting into 4 concurrent jobs) are not handled before Sep-10 the cycle testing begins in September 2 Server performance issues are not handled before the cycle testing begins in September Sep-10 3 Unanticipated table changes occur after the coding has been completed in August Aug-10 4 The testing environment chosen could interfere with other high priority projects Sep-10 5 Priority to implement non-rating mod may go up due to NJ coming up right after IOWA. Aug-10 6 Impact Analysis brings up something that we are not thinking of now (on both mainframe and PARIS Jun-10 sides), that may result in pushing the project dates 7 Coding may take longer than expected Jul-10 8 Finding too many differences between SBR and Mainframe rating of a policy during Integration Aug-10 Testing may longer to complete, pushing the dates for cycle testing and the project. 9 Daily business functions could be interrupted for Production Problems - taking the resources away Anytime from this project Ex: HSM, GA Home/ROP, Claims Splitting, RCT Changes 10 Other new product (MA Auto, NJ Auto, Company8, Chrome Expansion) - Taking resources away from Anytime this project 11 System upgrades (Rating Engine 4.0, end of VB6) may be pushed on us right in the middle of this Jun-10 project
Qualitative Analysis Example

Id Risk Description Event Date Probability Sep-10 Sep-10 Aug-10 Sep-10 Aug-10 Jun-10 Jul-10 Aug-10 Anytime Anytime Jun-10 High Low Low Low Low Low High Medium Medium High Low Impact Medium Medium Low Medium High Medium Medium Medium Medium High Medium 1 Performance issues due to redesign of batch (splitting into 4 concurrent jobs) are not handled before the cycle testing begins 2 Server performance issues are not handled before the cycle testing begins in September 3 Unanticipated table changes occur after the coding has been completed in August 4 The testing environment chosen could interfere with other high priority projects 5 Priority to implement non-rating mod may go up due to NJ coming up right after IOWA. 6 Impact Analysis brings up something that we are not thinking of now (on both mainframe and PARIS sides), that may push the project dates 7 Coding may take longer than expected 8 Finding too many differences between SBR and Mainframe rating of a policy may push the dates for cycle testing and the project. 9 Daily business functions could be interrupted for Production Problems taking the resources away from this project 10 Other new product (MA Auto, NJ Auto, Company8, Chrome Expansion) Taking resources away from this project 11 System upgrades (Rating Engine 4.0, end of VB6) may be pushed on us right in the middle of this project
Qualitative Analysis Example

Id Risk Description Event Date Probability High Low Low Low Medium Medium High Medium Medium High Low Impact Medium Medium Low Medium High Medium Medium Medium Medium High Medium 1 Performance issues due to redesign of batch (splitting into 4 concurrent Sep-10 jobs) are not handled before the cycle testing begins 2 Server performance issues are not handled before the cycle testing begins in Sep-10 September Aug-10 3 Unanticipated table changes occur after the coding has been completed in August 4 The testing environment chosen could interfere with other high priority Sep-10 projects 5 Priority to implement non-rating mod may go up due to NJ coming up Aug-10 right after IOWA. 6 Impact Analysis brings up something that we are not thinking of now (on both Jun-10 mainframe and PARIS sides), that may push the project dates 7 Coding may take longer than expected Jul-10 8 Finding too many differences between SBR and Mainframe rating of a policy Aug-10 may push the dates for cycle testing and the project. 9 Daily business functions could be interrupted for Production Problems Anytime taking the resources away from this project 10 Other new product (MA Auto, NJ Auto, Company8, Chrome Expansion) - Anytime Taking resources away from this project 11 System upgrades (Rating Engine 4.0, end of VB6) may be pushed on us Jun-10 right in the middle of this project
Quantitative Analysis Example

Id Risk Description 1 Performance issues due to redesign of batch (splitting into 4 concurrent jobs) are not handled before the cycle testing begins 2 Server performance issues are not handled before the cycle Sep-10 testing begins in September 3 Unanticipated table changes occur after the coding has been Aug-10 completed in August 4 The testing environment chosen could interfere with other high Sep-10 priority projects 5 Priority to implement non-rating mod may go up due to NJ Aug-10 coming up right after IOWA. 6 Impact Analysis brings up something that we are not thinking of Jun-10 now (on both mainframe and PARIS sides), that may push the 7 Coding may take longer than expected Jul-10 8 Finding too many differences between SBR and Mainframe Aug-10 rating of a policy may push the dates for cycle testing and the project. 9 Daily business functions could be interrupted for Production Anytime Problems - taking the resources away from this project 10 Other new product (MA Auto, NJ Auto, Company8, Chrome Expansion) - Taking resources away from this project 11 System upgrades (Rating Engine 4.0, end of VB6) may be pushed on us right in the middle of this project 11 Total Risk Magnitude for the Project Anytim e Jun-10 Event Probabili Impact Magnit (days) Date ty ude 10.5 Sep-10 H 70% M 15 L L L M M H M 10% M 10% L 10 5 10 40 15 20 15 1 0.5 1 10 3.75 10 4.5
10% M 25% H 25% M 50% M 30% M
M H
30% M 70% H
10 45
3 31.5
20% M
20
79.75

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