MITP Risk Management

7/29/2019 MITP Risk Management

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Risk Mana ement

What is a Project Risk?

uncertain event or condition

mpacts project o jectives

Examples?


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Uncertainty is a rule, not an

exception

Uncertainty is there whilepursuing opportunities as well

Risk i enti ication consequence

of uncertainty and not reflectionof our own ability

Characterizing Uncertainty in Projects

Variation: Cost, time and performance levels vary,

Foreseen Uncertainty : A few known factors willinfluence the project , but in unpredictable way

Unforeseen uncertainty: One or more majorinfluences factors can not be predicted

Chaos: Unforeseen events com letel invalidatethe project's target, planning and approach

Managing Project Uncertainty, Meyer, Loch, and Pich, Sloan Mgmt Review,2002


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What is risk management?

Risk Management :enti y, iscuss an ocument an

finalize the mitigation and contingencyaction plans for foreseen uncertaintythrough the lifecycle of the project.

Also, review and revaluate existing

identified risks, and discuss the progresson the mitigation actions.

Risk Planning

RiskIdentification

RiskMonitorin &

Control

IT PROJECT RISK

MANAGEMENT

PROCESSES

RiskAssessmentRisk

Response planning


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Project Risk Management Processes

Risk management planning: deciding how to

activities for the project

Risk identification: determining which risks arelikely to affect a project and documenting thecharacteristics of each

Qualitative risk analysis: prioritizing risksbased on their probability and impact ofoccurrence

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Project Risk Management Processes(continued)

Quantitative risk analysis: numerically estimatingthe effects of risks on project objectives

Risk response planning: taking steps to enhanceopportunities and reduce threats to meetingproject objectives

Risk monitoring and control: monitoring identifiedan res ua r s s, en y ng new r s s, carry ngout risk response plans, and evaluating theeffectiveness of risk strategies throughout thelife of the project

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Project Risk Management Summary

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Risk Management Planning

Create a RM plan omm men o a e o ers me

Frequency of review of the risks

Methodology to be followed

Availability of tools, if required Review and up dation of the plan at regular

intervals or when required


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Risk Identification

Both threats and opportunities can be

Risks need to be identified through everyphase of the project Can have unique risks associated to every phase

Risk identification to start from the proposalstage

Risk Identification

How will you identify?

Risk identification tools and techniquesinclude:

Brainstorming

The Delphi Technique

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Risk Identification

How will you document identified risk? Risk Register

What will you document? Name

Description

Owner

Triggers

Mitigation plan

contingency plan

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Sample Risk Register

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Qualitative Risk Analysis

Assess the likelihood and impact of

magnitude and priority

Risk quantification tools and techniquesinclude: Probability/impact matrixes

T e Top Ten Risk Item Tracking

Expert judgment

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Risk Assessment & Analysis

Analysis: To determine probability and

Assessment : Prioritizing risk to formulatethe strategy

Risk Priority = Probability * Impact


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Risk Assessment & AnalysisTechniques

eig te na ysis

Multi-variable Analysis

Weighted Analysis

Probability Reference Table

Score General Scale Probability Sco General Impact

Impact Reference Table

1 Low Infrequently

2 Medium Occasionally

3 High Frequently

re Sca e

1 VeryLow

Nuisance or NA

2 Low Limits effectiveness

3 Medium Financial Impact, CustomerDissatisfaction

4 High Disruption to Operation,Large Financial Impact Risk Priority = Probability * Impact

5 VeryHigh

Major Financial impact,significant complianceconcern

Highest possible priority = 15

Lowest possible priority = 1


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Weighted AnalysisFor each variable, determine probability and impact

Risk Variable Probability-

Impact-

Priority*- -

ScheduleSlippage

3 5 15

IBM AIX skillsnot available

2 5 10

Delay in Visaprocessing

2 3 6

Priority cut-off is determined after calculating priorities

Only risks above the cut-off are carried forward for analysis

Method favors Impact over Probability

Multi-Variable Analysis Impact calculated against 4 variables of Schedule, Cost, Quality & Scope to

determine impact weight

Probability assessed to determine probability weight

Probability & Impact used to calculate priority

Impact weight classified as Low, Medium or High based on the table below:

Impact Schedule Cost Quality Scope ImpactWt

Low 5% offunctionalitycannot bedelivered

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Multi-Variable Analysis

Probability of impact is classified asOccurrence Probabilit Wei ht

Improbable < 5% chance ofoccurrence

2

Likely 5% - 50% chance ofoccurrence

5

Very Likely 50% chance ofoccurrence

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Multi-Variable Analysis

Risk Impact on Impact Weight ProbabilityWeight

Impact Value

IBM AIX skillsnot available

Schedule 5 5 25

Cost 5 5 25

Quality 10 10 100

Scope 2 2 4

Risk Weight 154

Priority of the risk decided on the risk weight as computed above

Priority cut-off is determined after calculating priorities

Only risks above the cut-off are carried forward for analysis

Method favors Impact and Probability equally


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Quantitative Risk Analysis

Often follows qualitative risk analysis, but

Large, complex projects involving leadingedge technologies often require extensivequantitative risk analysis

Main techniques include: Simulation

Sensitivity analysis

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Steps of a Monte Carlo Analysis

1. Assess the range for the variables beingconsidered

2. Determine the probability distribution ofeach variable

3. For each variable, select a random value basedon the probability distribution

.through the model

5. Repeat steps 3 and 4 many times to obtain theprobability distribution of the models results

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Sample Monte Carlo Simulation Results forProject Schedule

40Information Technology Project Management, Fifth Edition, Copyright 2007

s1

What should be Risk Strategyor Response to Risk?

Accept or Ignore

Avoidance

Mitigate

Transfer


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lide 40

1 I can't seem to read the final art files for this chapter. This figure is the same as what should be hereexcept for the dates. OK as is, or can someone put in the proper art file?schwalbe, 1/21/2005


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Risk Response Planning

Each risk must have One or more miti ation actions

Contingency actions

Each action must have an owner and target completiondate

Mitigation action may include modification to project approachor roles and responsibilities

Must have a Risk Profile : a template to present Risk assessment, impact and mitigation plans

The impact on estimates of time, costs, scope

RISK MONITORING AND CONTROL

Risk Audits

is eviews

Risk Status meeting and Reports

Monitor the triggers continuously and keep.


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Risk Management for the Project

Risk Identification: Brain Storming Delphi

Risk Assessment & Analysis : Multi-variable Analysis

Risk Response Planning : Mitigation and Contingency actions stated

Risk Monitoring and Control : Status Reporting Audits & Reviews

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MITP Risk Management