Chapter 11 (Project Risk Management) – Flashcards
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Project Risk Management
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The processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. ***The objectives are to increase the probability and impact of positive events and decrease the probability and impact of negative events.
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What are the six process for Project Risk Management?
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Plan Risk Management, Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Risk Responses, Control Risks
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Plan Risk Management
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The process of defining how to conduct risk management activities for a project.
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Plan Risk Management Inputs
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Project Management Plan, Project Charter, Stakeholder Register, Enterprise Environmental Factors, Organizational Process Assets
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Plan Risk Management Tools and Techniques
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Analytical Techniques, Expert Judgment, Meetings
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Plan Risk Management Outputs
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Risk Management Plan
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Analytical Techniques
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Are is a combo of stakeholder risk attitudes and the strategic risk exposure of a given project based on the overall project context
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Risk Management Plan
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Describes how risk management will be structured and performed on the project. The Risk Management Plan includes Methodology, Roles and Responsibilities, Budgeting, Timing, Risk Categories, Definitions of Risk Probability and Impact, Probability and Impact Matrix, Revised Stakeholders Tolerances, Reporting Formats, and Tracking
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Identify Risks
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The process of determining which risks may affect the project and documenting their characteristics. **Is an iterative process because new risks may evolve or become known as the project progresses.
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Identify Risks Inputs
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Risk Management Plan, Cost Management Plan, Schedule Management Plan, Quality Management Plan, Human Resource Management Plan, Scope Baseline, Activity Cost Estimates, Activity Duration Estimates, Stakeholder Register, Project Documents, Procurement Documents, Enterprise Environmental Factors, Organizational Process Assets
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Identify Risks Tools and Techniques
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Documentation Reviews, Information Gathering Techniques, Checklist Analysis, Assumptions Analysis, Diagramming Techniques, SWOT Analysis, Expert Judgment
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Identify Risks Outputs
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Risk Register
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Information Gathering Techniques
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Brainstorming, Delphi Technique, Interviews, Root Cause Analysis
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Delphi Technique
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Is a way to reach a consensus of experts. Experts participate anonymously, a facilitator uses a questionnaire to solicit ideas about the important project risks. Responses are summarized and are then recirculated to the experts for further comment. Keep going till consensus is made.
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Assumption Analysis
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Explores the validity of assumptions as they apply to the project. It identifies risks to the project from inaccuracy, instability, inconsistency, or incompleteness of assumptions.
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What are some Diagramming Techniques?
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Cause and Effect, System or Process Flow Charts, Influence Diagrams
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SWOT Analysis
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Examines the project from each of the (Strengths, Weaknesses, Opportunities, and Threats) perspectives to increase the breadth of identified risks by including internally generated risks. **Starts with Strengths and Weaknesses or organization, then goes to Opportunities for Strengths, and then Threats for Weaknesses.
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Risk Register
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The document containing the results of the qualitative risk analysis, quantitative risk analysis, and risk response planning. It details all identified risks, including description, category, cause, probability of occurring, impact(s) on objectives, proposed responses, owners, and current status.
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Perform Qualitative Risk Analysis
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The process of prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.
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Perform Qualitative Risk Analysis Inputs
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Risk Management Plan, Scope Baseline, Risk Register, Enterprise Environmental Factors, Organizational Process Assets
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Perform Qualitative Risk Analysis Tools and Techniques
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Risk Probability and Impact Assessment, Probability and Impact Matrix, Risk Data Quality Assessment, Risk Categorization, Risk Urgency Assessment, Expert Judgment
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Perform Qualitative Risk Analysis Outputs
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Project Documents Updates
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Risk Probability and Impact Assessment
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Investigates the likelihood that each specific risk will occur and the potential effect on a project objective such as schedule, cost, quality, or performance, including both negative effects for threats and positive effects for opportunites.
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Probability and Impact Matrix
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Risks can be prioritized for further quantitative analysis and planning risk responses based on their risk rating. Ratings are assigned to risks based on their assessed probability and impact.
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Risk Data Quality Assessment
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Evaluates the degree to which the data about risks are useful for risk management. Involves examining the degree to which the risk is understood and the accuracy, quality, reliability, and integrity of the data regarding the risk.
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Perform Quantitative Risk Analysis
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The process of numerically analyzing the effect of identified risks on overall project objectives. **Performed on risks that have been prioritized as potentially and substantially impacting the project's competing demands.
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Perform Quantitative Risk Analysis Inputs
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Risk Management Plan, Cost Management Plan, Schedule Management Plan, Risk Register, Enterprise Environmental Factors, Organizational Process Assets
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Perform Quantitative Risk Analysis Tools and Techniques
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Data Gathering and Representation Techniques, Quantitative Risk Analysis and Modeling Techniques, Expert Judgment
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Perform Quantitative Risk Analysis Outputs
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Project Documents Updates
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Data Gathering and Representation Techniques
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Interviewing, Probability Distributions; represent the uncertainty in values such as durations of schedule activities and cost of project components.
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What are some commonly used Quantitative Risk Analysis and Modeling Techniques?
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Sensitivity Analysis, Expected Monetary Value Analysis, Modeling and Simulation
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Sensitivity Analysis
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Helps to determine which risks have the most potential impact on the project. It examines the extent to which the uncertainty of each project element affects the objective being examined when all other uncertain elements are held at their baseline values.
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Expected Monetary Value Analysis
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Is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen. The EMV of opportunities will generally be expressed as positive values, while those of threats will be negative. ****EMV requires a risk-neutral assumption, neither risk averse, nor risk seeking. ****EMV is calculated by multiplying the value of each possible outcome by its probability of occurrence and adding the products together.
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Modeling and Simulation
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Uses a model that translates the specified detailed uncertainties of the project into their potential impact on project objectives. Iterative simulations are typically performed using the Monte Carlo techniques.
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Plan Risk Responses
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The process of developing options and actions to enhance opportunities and to reduce threats to project objectives. **Includes assigning one person to take the responsibility for each agreed-to and funded risk response.
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Plan Risk Responses Inputs
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Risk Management Plan, Risk Register
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Plan Risk Responses Tools and Techniques
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Strategies for Negative Risks or Threats, Strategies for Positive Risks or Opportunities, Contingent Response Strategies, Expert Judgment
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Plan Risk Responses Outputs
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Project Management Plan Updates, Project Documents Updates
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What are the four Strategies for Negative Risks or Threats?
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Avoid, Transfer, Mitigate, and Accept
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Strategies for Negative Risks or Threats: Avoid
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Involves changing the project management plan to eliminate the threat entirely. The project manager may also isolate the project objectives from the risk's impact or change the objective that is in jeopardy.
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Strategies for Negative Risks or Threats: Transfer
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Requires shifting some or all of the negative impact of a threat, along with ownership of the response, to a third party. ***Put simply it gives another party responsibility for its management BUT DOES NOT ELIMINATE THE THREAT!!!
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Strategies for Negative Risks or Threats: Mitigate
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Implies a reduction in the probability and/or impact of an adverse risk event to be within acceptable threshold limits. Examples include; adopting less complex processes, conducting more tests, or choosing a more stable supplier.
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What are some Strategies for Positive Risks or Threats?
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Exploit, Share, Enhance, Accpet
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Strategies for Positive Risks or Threats: Exploit
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This strategy may be selected for risks with positive impacts where the organization wishes to ensure that the opportunity is realized. It seeks to eliminate the uncertainty associated with a particular upside risk by ensuring the opportunity definitely happens.
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Strategies for Positive Risks or Threats: Share
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It involves allocating some or all of the ownership of the opportunity to a third party who is best able to capture the opportunity for the benefit of the project.
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Strategies for Positive Risks or Threats: Enhance
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This strategy is used to increase the probability and/or the positive impacts of an opportunity. Identifying and maximizing key drivers of these positive-impact risks may increase the probability of their occurrence.
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Contingent Response Strategies
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A response plan that will only be executed under certain predefined conditions, if it is believed that there will be sufficient warning to implement the plan. Events that trigger the contingency response, such as missing intermediate milestones or gaining higher priority with a supplier, should be defined and tracked.
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Risk-Related Contract Decisions
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Decisions to transfer risk, such as agreements for insurance, services, and other items as appropriate are selected in this process. This may happen as a result of mitigating or transferring part or all of the threat or enhancing or sharing part or all of the opportunity.
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Control Risks
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The process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.
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What are some purposes of Monitor and Control Risks?
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To determine if; project assumptions are still valid, analysis shows an assessed risk has changed or can be retired, risk management policies and procedures are being followed, and contingency reserves of cost or schedule should be modified in alignment with the current risk assessment, etc
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Control Risks Inputs
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Project Management Plan, Risk Register, Work Performance Data, Work Performance Reports
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Control Risks Tools and Techniques
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Risk Reassessment, Risk Audits, Variance and Trend Analysis, Technical Performance Measurement, Reserve Analysis, Status Meetings
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Control Risks Outputs
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Work Performance Info, Change requests, Project Management Plan Updates, Project Documents Updates, Organizational Process Assets Updates
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Risk Audits
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Examine and document the effectiveness of risk responses in dealing with identified risks and their root causes, as well as the effectiveness of the risk management process.
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Technical Performance Measurement
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Compares technical accomplishments during project execution to the project management plan's schedule of technical achievement. It requires definition of objective quantifiable measures of technical performance which can be used to compare actual results against targets.
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Reserve Analysis
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Compares the amount of the contingency reserves remaining tot he amount of risk remaining at any time in the project in order to determine if the remaining reserve is adequate.
