Professional Documents
Culture Documents
Chapter 7
7-2
Risk Vs Amount at Stake
Total Project Life Cycle
Plan Accomplish
Phase 1 Phase 2 Phase 3 Phase 4
Concept Development Implementation Termination
Conceive Develop Execute Finish
(C) (D) (E) (F)
Opportunity and risk
Increasing Risk
$ Value
Period of
highest
Amount at stake risk impact
Time
7-3
Process of Risk Management
7-4
Four Stages of Risk Management
Risk identification
7-5
Risk Clusters
• Financial • Commercial
• Technical • Execution
• Contractual/Legal
Brainstorming meetings
Expert opinion
Past history
7-7
Risk Management Assessment Matrix
Consequences
Low High
Low
Likelihood
High
7-8
Project Risk Scoring
1. Identify factors and assess the probability
(Pf ) and consequences (Cf) of failure
2. Calculate overall probability & consequence
∑P i ∑C i
Pf = n
Cf = m
n m
3. Calculate overall risk factor
RF = Pf + C f − ( Pf )(C f )
7-9
Risk Mitigation Strategies
• Accept
• Minimize
• Share
• Transfer
• Contingency Reserves
– Task contingency
– Managerial contingency
• Mentoring
• Cross training
7-10
Control & Documentation
Help managers classify and codify risks, responses, and
outcomes
7-11
Project Risk Analysis & Management
7-12
Nine Phases of Risk Assessment
1. Define
2. Focus
3. Identify
4. Structure
5. Clarify ownership of risks
6. Estimate
7. Evaluate
8. Plan
9. Manage
7-13