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Risky Business
Avneet Mathur (PMP)
Essentials of Risk Management
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What is a Project? A project is a temporary endeavor undertaken to
produce a unique product or service
TemporaryDefinitive beginning and end UniqueNew undertaking, unfamiliar ground
Temporary UniqueCharacteristics ofProjects
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Risk RISK can be defined as the threat or probability that
an action or event, will adversely or beneficially affectan organization's ability to achieve its objectives*.
In simple terms risk is Uncertainty of Outcome,either from pursuing a future positive opportunity, or
an existing negative threat in trying to achieve acurrent objective.
* Luhmann 1996:3
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Issue vs. Risk
TODAY FUTURE
ISSUE RISK
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Issue vs. Risk
If not fixed today, task stops If not identified, may become issue later
ISSUE RISK
Issue already impacting
the cost, time or quality
Risk POTENTIAL negative
impact to project
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Whats the Plan?
Identification Quantification Response
Monitoring
and Control
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Identification Risk Types
Business (risk to overall business)
Delivery (risk to project delivery)
Technical (specific to particular technology)
Cause Impact
Vendor not meeting deadline Budget will be exceeded
"The vendor not meeting deadline will mean that budget will be exceeded"
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QuantificationRisk
LikelihoodImpact
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QuantificationTitle Score Description
Very low 20
20 Highly unlikely to occur based on current information, as the circumstances likely to trigger the risk
are also unlikely to occur.
Low 40
Unlikely to occur. However needs to be monitored as certain circumstances could result in this risk
becoming more likely to occur during the project.
Medium 60 Likely to occur as it is clear that the risk may eventuate.
High 80 Very likely to occur, based on the circumstances of the project.
Very High 100
Highly likely to occur as the circumstances that will cause this risk to eventuate are also very likely to
eventuate
Title Score Description Impact *
Very low 20 Insignificant impact on the project. -
Low 40 Minor impact on the project. < 5%
Medium 60 Measurable impact on the project. 5 - 10 %
High 80 Significant impact on the project. 10 - 25 %
Very high 100 Major impact on the project. > 25%
* Deviation in scope, scheduled end-date or project budget
IMPACT
LIKELIHOOD
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Quantification
Priority = [Likelihood + Impact]
------------------------------
2
Priority Score Priority Rating Priority Color-----------------------------------------------------------------------020 Very Low Black2140 Low Green
4160 Medium Yellow6180 High Orange81100 Very High Red
Risk ID Likelihood Impact Priority Rating
1.1 20 80 50 Medium
1.2 80 60 70 High
1.3 100 40 70 High
2.1 40 20 30 Low
2.2 90 100 95 Very High
2.3 20 80 50 Medium
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Response
Risk ID Rating Preventive Actions
Action
Resource
Action
Date
Contingent
Actions
Action
Resource
Action
Date
2.2 Very High Clearly identify the
expected business
benefits
Project sponsor DDMMYY Measure the actual
business benefits
achieved by the
project
Project
Manager
DDMMYY
2.3 High All requirements need
to be well defined.
Project sponsor DDMMYY Stakeholders need to
sign-off on the
requirements.
Project
Manager
DDMMYY
Address risks rated based on severity . Very-High-rated risks warrant thehighest priority, and should be addressed before the less severe classes of risks,and should be tracked until they can be downgraded.
Create a Risk Schedule to address these risks.
In a risk schedule, for every risk identified, preventive actions are listed thatare required to reduce the likelihood of the risk occurring, as well as thecontingent actions needed to reduce the impact to the project should the riskoccur.
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Monitoring and Control Continually monitor risks to identify any change in the
status, or if they turn into an issue.
Hold regular risk reviews To identify actions outstanding, risk probability and impact
Remove risks that have passed
Identify new risks
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Case Study
Buying a Used Car online Requirements
Buy a car over the internet
Price less than $15,000
Reliable
Specific make and model
Mileage
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Case Study
Buying a Used Car online Sample Risks
Buy a car over the internet Most people would say dont! to eliminate the risk, but this is a requirement
Websites that do not have good ratings
Price less than $15,000 Owner may increase price or add additional cost after finalizing the deal.
Hidden cost
Reliable Does not need frequent repairs
Does not breakdown
Good brand Specific make and model
Not getting the same model after finalizing the car
Mileage Odometer rollback
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Case Study
Buying a Used Car online Risk Quantification
Buy a car over the internet Websites that do not have good ratings
Price less than $15,000 Owner may increase price or add additional cost after finalizing the deal.
Hidden cost
ID Likelihood Impact Priority
1.1 40 60 (40+60)/2 = 50
ID Likelihood Impact Priority
2.1 20 40 (20+40)/2 = 30
Medium
Low
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Case Study
Buying a Used Car online Risk Quantification
Reliable Does not need frequent repairs
Does not breakdown
Good brand
Specific make and model Not getting the same model after finalizing the car
ID Likelihood Impact Priority
3.1 60 100 (60+100)/2 = 80
3.2 20 80 (20+80)/2 = 50
3.3 40 80 (40+80) /2 = 60
ID Likelihood Impact Priority
4.1 20 40 (20+40)/2 = 30
High
Medium
Medium
Low
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Case Study
Buying a Used Car online Risk Quantification
Mileage Odometer rollback
ID Likelihood Impact Priority
5.1 80 80 (80+80)/2 = 80 High
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Case Study
Buying a Used Car online Risk Response
Risk ID Rating Preventive Actions
Action
Resource
Action
Date
Contingent
Actions
Action
Resource
Action
Date5.1 High Get a Car Fax report
and check mileage
history
Project sponsor DDMMYY Avoid cars with no car
fax history.
Project
Manager
DDMMYY
1.1 Medium Check website rating
before initiating a
purchase
Project sponsor DDMMYY Avoid suspicious
websites or too good
to be true deals.
Project
Manager
DDMMYY
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Summary Risk management is a project management tool for handling events
that might adversely impact the project, thereby increasing thelikelihood of success.
A sound process like this removes the uncertainty and empowers theproject manager to complete their project within schedule and withinbudget.
Asses Risk
Identify Risk Analyze Risk Prioritize Risk
Control Risk
Mitigate Risk Control Risk Measure Risk
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About the Author
Avneet Mathuris a Certified Project Management Professional,
as awarded by the Project Management Institute, USA and has
been involved in IT for more than a decade.
He holds an MBA in General Business Administration, with an
additional Master's Degree in Computer Science and
Networking from University of Missouri, Kansas City. He also
has a Bachelor's Degree in Computer Science from theAurangabad University, India. He can be reached at
mailto:[email protected]:[email protected]8/13/2019 Essentials of Risk Management
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About Project PerfectProject Perfect is a project management software consulting
and training organisation based in Sydney Australia. Theirfocus is to provide organisations with the project
infrastructure they need to successfully manage projects.Project Perfect sell Project Administrator software, which is
a tool to assist organisations better manage project risks,issues, budgets, scope, documentation planning and
scheduling. They also created a technique for gatheringrequirements called Method H, and sell software tosupport the technique. For more information on Projecttools or Project Management visit
www.projectperfect.com.au
http://www.projectperfect.com.au/http://www.projectperfect.com.au/