Project Risk Management

PMGT730
Term 2018-19
Assignment 1
Submitted By
Student Name Student No.
Avinash Kalayappan 301000798
Project Risk Management

Table of Contents

Concepts of Project Risk Management..................................................................................1

Risk Probability......................................................................................................................1

Risk Impact.............................................................................................................................1

Risk Severity..........................................................................................................................1

Risk Categorization................................................................................................................1

Practices of Project Risk Management..................................................................................2

Determine the most critical risks............................................................................................2

Determination of Risk Management Strategies......................................................................2

Project Risk Management

Concepts of Project Risk Management

Risk Probability

The probability of a risk is based on how often we believe that the risk may occur in the

project. Risks that have a higher probability of occurrence could be attended first.

For example: If two of the best football teams play, there would be 50% probability for either

team to lose.

Risk Impact

The impact of a risk on a project may be determined by the effect it will have on the project if

the event occurs. Risks that have high impact on the project could be the ones that we will

need to concentrate on.

For example: In a project that designs card pay systems for public transport(like Presto), the

impact will be Very High if the system is a failure.

Risk Severity

Risk Severity is a method of measuring the probability of occurrence against the impact of

risks in an individual project. The higher the severity of a project, the more the impact on the

project and probability of occurrence.

This will help in identifying the priority of the risks in a project. The risks with the highest

severity have to be looked into first.

Risk Categorization

Risks can be categorized in many ways. It is best to categorize them based on the Work

Breakdown Structure or the Risk Breakdown Structure. Risks are also categorized based on

the priority.

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Project Risk Management

This quickens the process of managing risks by grouping them and solving one group at a

time.

Practices of Project Risk Management

Determine the most critical risks

In a project there should be a baseline for the level of impact a probability of a risk on a

project. All risks above this are to be considered critical and should be paid more attention.

The factors of the risk including cost, business efficiency and reputation should be

considered.

Determination of Risk Management Strategies

We need to choose one of the below strategies based on the management costs and impacts

on the projects.

1. Risk acceptance:

We know the risk and accept its consequences. This is often sed when mitigation

costs are too high.

2. Risk Avoidance:

The activity that contains the risk is eliminated. This removes the risk and benefits of

a certain action. For example: If we don’t leave our house, we will be safe and we

won’t gain anything out of it.

3. Risk Transfer:

This can be used to transfer the risk or part of the risk if the cost is worthy enough.

For example, paying an insurance company for managing the project risks.

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Project Risk Management

4. Risk Mitigation:

Risk mitigation can be used to minimize the probability of occurrence of the risk or

it’s impact on the project. This requires investment and is not the best solution to all

risks.

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