Transcript Risk Management PowerPoint Presentation

Risky Business
Essentials of Risk Management
Avneet Mathur (PMP)
[email protected]
What is a Project?
 A project is a temporary endeavor undertaken to
produce a unique product or service
Temporary
Characteristics of
Projects
Unique
 Temporary – Definitive beginning and end
 Unique – New undertaking, unfamiliar ground
Risk
 RISK can be defined as “the threat or probability that
an action or event, will adversely or beneficially affect
an 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 a
current objective.
* Luhmann 1996:3
Issue vs. Risk
ISSUE
TODAY
RISK
FUTURE
Issue vs. Risk
ISSUE
If not fixed today, task stops
Issue… already impacting
the cost, time or quality
RISK
If not identified, may become issue later
Risk… POTENTIAL negative
impact to project
What’s the Plan?
Identification
Quantification
Response
Monitoring
and Control
Identification
 Risk Types
 Business (risk to overall business)
 Delivery (risk to project delivery)
 Technical (specific to particular technology)
Vendor not meeting deadline
Cause
Budget will be exceeded
Impact
"The vendor not meeting deadline will mean that budget will be exceeded"
Quantification
Risk
Impact
Likelihood
Quantification
LIKELIHOOD
Title
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 High
100
Very likely to occur, based on the circumstances of the project.
Highly likely to occur as the circumstances that will cause this risk to eventuate are also very likely to
eventuate
Title
IMPACT
Score
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
Quantification
Priority = [Likelihood + Impact]
-----------------------------2
Risk ID Likelihood Impact
1.1
20
80
1.2
80
60
1.3
100
40
2.1
40
20
2.2
90
100
2.3
20
80
Priority Score
Priority Rating
Priority Color
----------------------------------------------------------------------0–20
Very Low
Black
21–40
Low
Green
41–60
Medium
Yellow
61–80
High
Orange
81–100
Very High
Red
Priority
50
70
70
30
95
50
Rating
Medium
High
High
Low
Very High
Medium
Response

Address risks rated based on severity . Very-High-rated risks warrant the
highest 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 that
are required to reduce the likelihood of the risk occurring, as well as the
contingent actions needed to reduce the impact to the project should the risk
occur.
Risk ID
2.2
Rating
Very High
2.3
High
…
…
Action
Resource
Project sponsor
Action
Date
DDMMYY
Contingent
Actions
Measure the actual
business benefits
achieved by the
project
Action
Resource
Project
Manager
Action
Date
DDMMYY
All requirements need Project sponsor
to be well defined.
DDMMYY
Stakeholders need to
sign-off on the
requirements.
Project
Manager
DDMMYY
Preventive Actions
Clearly identify the
expected business
benefits
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
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
Case Study – Buying a Used Car online
 Sample Risks
 Buy a car over the internet
 Most people would say don’t! 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
Case Study – Buying a Used Car online
 Risk Quantification
 Buy a car over the internet
 Websites that do not have good ratings
ID
Likelihood
Impact
Priority
1.1
40
60
(40+60)/2 = 50
Medium
 Price less than $15,000
 Owner may increase price or add additional cost after finalizing the deal.
 Hidden cost
ID
Likelihood
Impact
Priority
2.1
20
40
(20+40)/2 = 30
Low
Case Study – Buying a Used Car online
 Risk Quantification
 Reliable
 Does not need frequent repairs
 Does not breakdown
 Good brand
ID
Likelihood
Impact
Priority
3.1
60
100
(60+100)/2 = 80
High
3.2
20
80
(20+80)/2 = 50
Medium
3.3
40
80
(40+80) /2 = 60
Medium
 Specific make and model
 Not getting the same model after finalizing the car
ID
Likelihood
Impact
Priority
4.1
20
40
(20+40)/2 = 30
Low
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
Case Study – Buying a Used Car online
 Risk Response
Risk ID
5.1
Rating
High
Preventive Actions
Get a Car Fax report
and check mileage
history
1.1
Medium
Check website rating
before initiating a
purchase
…
…
Action
Resource
Project sponsor
Action
Date
DDMMYY
Contingent
Actions
Avoid cars with no car
fax history.
Action
Resource
Project
Manager
Action
Date
DDMMYY
Project sponsor
DDMMYY
Avoid “suspicious
websites” or too good
to be true deals.
Project
Manager
DDMMYY
Summary
 Risk management is a project management tool for handling events
that might adversely impact the project, thereby increasing the
likelihood of success.
 A sound process like this removes the uncertainty and empowers the
project manager to complete their project within schedule and within
budget.
Mitigate Risk
Control Risk
Measure Risk
Control Risk
Identify Risk
Analyze Risk
Asses Risk
Prioritize Risk
About the Author
Avneet Mathur is 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 the
Aurangabad University, India. He can be reached at
[email protected]
About Project Perfect
Project Perfect is a project management software consulting
and training organisation based in Sydney Australia. Their
focus 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 gathering
requirements called “Method H”, and sell software to
support the technique. For more information on Project
tools or Project Management visit
www.projectperfect.com.au