Professional Documents
Culture Documents
Project Risk Management
Project Risk Management
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Let us think about risk
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Hazard is Risk tolerance
• An situation or condition that • The amount of risk that is
is likely to cause a harm or a acceptable to the individual,
loss under certain organization or client
circumstance (Dangerous
condition)
• It may be different from the
• Hazard is a prerequisite to individuals working in that
risk organization
• Hazard is a condition not an
event
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Understanding Risk
• Risk happens as a result of a cause
• Examples
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Risk Spectrum Uncertainty, Opportunity, Risk
Favorable
Opportunity
Known Unknown
Unknown Known
Known Or
Unknown Unknown Uncertainty
Unfavorable
Total Total Risk
Uncertainty Certainty
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Types of risk Types of Risk (Source)
• Internal risk
• Source
• Amount of information available • External risk
• Personal
• Insurability • Technical risk
• Ability to control the risk
• Constraints • Unforeseeable risk
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Known/Unknown risks
• Identified, assessed and quantified risks • Pure risk
Develop a contingency plan to cover Only a chance for loss, no chance for profit
(Direct property loss / indirect property
loss)
Unknown/Unknown risks
• Not identified, impossible to predict
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Individual Exercise I-1 Risk Taking Tips
Think of one risk you have successfully taken or about to take.
Answer the following questions: • Never risk more than you can
• The risk I am about to take is:
afford to lose.
• Was that situation a risk or uncertain situation? And why
• How did you approach that risk? • Reduce the amount of risk as much
• What exactly was risky about the situation? What could go wrong?
as you can.
• Did you think about reducing the risk?
• What are the chances of that happening? • Practice makes perfect.
• Did you think about the consequences of this risk?
• Did you ask yourself, what is the worst that could happen? • Try new ways of doing things.
• If you do not take that risk, what would you lose? • Keep track of the risks you take.
• Why should I take the risk If I take the risk what will I gain? What can
be done if the desired results are not achieved? • Failure is temporary. and pursue
• Can I break down the risk into small risks so you do not risk as much?
• Is the potential reward worth the risk?
same with them until all work is
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satisfactorily completed. 32
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What is Project Management Common Sources of Risk
• Change in the requirements
• The application of knowledge, tools
and techniques to project activities
• Design errors, omissions
to ensure project success • Misunderstandings among project
• Project management is risk team
management • Poorly defined or understood roles
• Insufficiently skilled staff
• False assumptions
• Subcontractor performance
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Why Risk Management is Risk Management Guidelines
important?
• It offers significant improvement to the
final project • Applies to all projects
• Projects have better chances of success • It should be done throughout the
• It improves the project schedule and life cycle of the project
cost
• It is the responsibility of the Project
• Stakeholders and team members will Manager
better understand the nature of the
project • It is the ultimate responsibility of the
• It helps to define the strengths and the sponsor
weaknesses of the project
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Qualitative Risk Analysis Quantitative Risk Analysis
• Evaluating risks and risk interaction to
Performing analysis of risk and
assess the range of possible project
condition to prioritize the risk that outcomes
have major impact on the project.
• Measuring the probability and the
consequence of risk and estimating its
impact on the project objectives
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