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Are you a new Business Analyst? Learn the basics of risk, what tools you can learn to identify risk, and even how to estimate risk.
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RISK
J O H A N N L O H R M A N N
S R . B U S I N E S S A N A L Y S T
W W W . J O H A N N L O H R M A N N . C O M
DEFINITION OF RISK
Process that helps identify and
manage potential problems that
could undermine key business
initiatives or projects.
2
WHEN DO I CONDUCT RISK ANALYSIS?
Planning projects: anticipate and neutralize possible problems.
Deciding to move forward with a project.
Changes in environment: new competitors coming into the market, or changes to government policy.
3
HOW DO I CONDUCT RISK ANALYSIS?
1. Identify
2. Estimate
3. Manage
4
1. IDENTIFY THREATS
Project Going over budget, taking
too long on key tasks, or
experiencing issues with product or
service quality.
5
WHAT TOOLS DO I USE TO ANALYZE RISK?
SWOT
Failure Mode and Effects Analysis
(FMEA)
Scenario Analysis6
SWOT
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FAILURE MODE AND EFFECTS ANALYSIS
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SCENARIO ANALYSIS
1. Define the Problem
2. Gather Data
3. Separate Certainties From
Uncertainties
4. Develop Scenarios (Good
Outcomes vs. Bad Outcomes)9
2. ESTIMATE THE RISK
Risk Value = Probability of Event x
Cost of Event
10
RISK VALUE: DEFINITIONS
Probability: A risk is an event that
"may" occur.
Impact: impact varies in terms of
cost and impact of a critical factor.
11
HOW DO I ESTIMATE THE RISK?
Identified Risk: Rent may increase
Percentage Likelihood that the rent will
increase: 80%
Cost to Business: $500,000
Risk Value
0.80 (Probability of Event) x $500,000 (Cost
of Event) = $400,000 (Risk Value)12
ANOTHER WAY TO ESTIMATE THE RISKSLow impact/low probability Often
ignore them.
Low impact/high probability Cope.
Reduce likelihood they'll occur.
High impact/low probability High
importance, unlikely to happen.
High impact/high probability
Critical importance, top priority.
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3. MANAGE THE RISK
Avoid
Share
Accept
14
AVOID THE RISK
Conduct What If Brainstorming
Session.
15
SHARE THE RISK
Potential gain with other people,
teams, organizations, or third
parties.
16
ACCEPT THE RISK
Conduct an Impact Analysis.
Create a Contingency Plan.
17
CONTROL THE RISK
Intelligent Risks
Business Experiments
Preventative Action
Detective Action
18
BUSINESS EXPERIMENTS
1.Create a Hypothesis
2.Design Your Experiment
3.Run the Experiment
4.Analyze Results and Follow Up if Necessary
19
CONTROL THE RISK TOOLS: PLAN, DO, CHECK, ACT
Step# Benefit
1. Plan Define the Problem
2. Do Generate Solutions
3. Check Look at the Effectiveness
4. Act Continuous Improvement
20
RISK
J O H A N N L O H R M A N N
S R . B U S I N E S S A N A L Y S T
W W W . J O H A N N L O H R M A N N . C O M