RISK MANAGEMENT PRESENTATIONASQ- GREATER HOUSTON SECTION

1405

Lila Carden, Ph.D., MBA, PMP

University of Houston

Instructional Associate Professor

lcarden@uh.edu

Agenda

ISO 31000 - Published in November 2009 Benefits of Risk Management 21 Ways to Excel at Project Management Risk Management Processes Risk Management Application Top 10 Risk Issues 10 Golden Rules of Project Risk

Management

ISO 31000Published in November 2009

First international standard of risk management Provides principles and generic guidelines on risk

management Plans will still need to include the needs of a specific

organization Standard that can be used by any public, private

or community enterprise, association, group or individual Not industry specific Useful for all managers – operational, financial and

project

Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009. Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271

ISO 31000Published in November 2009

Framework to integrate the process of managing risks and reporting Risk management processes include

identifying, analyzing, responding, implementing and monitoring risks.

Two key functions throughout implementation Communication and consultation need to include

internal and external stakeholders Monitor and review need to include controls,

lessons learned, responses to risks and ready for change

Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009. Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271

Benefits of Risk Management

Establishes project feasibility Lowers costs – rework and unforeseen late efforts are

reduced Establishes project priority and management

support - risk plan noting competence and preparation

Enables project portfolio management – low risk and high risk projects

Exposes weakness in project plans Plans management reserves Facilitates project communication and monitoring –

exposes weaknesses to the team

Kendrick. T. (2009). Identifying and managing project risk. New York: AMACOM.

21 Ways to Excel at Project Management

Managing the risks is number 6 on the list Top 5 include

Sponsorship and Leadership Defining the business objectives Defining the project Ensuring the project is a manageable size Defining the budget

Haughey, D. ( 2013). 21 ways to excel at project management. Retrieved from http://www.projectsmart.com/

7

Risk Management Processes

PMBOK’s project risk management processes include:

Plan Risk Management – how to conduct risk management activities

Identify Risks – determine risks and document characteristics

Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis Plan Risk Responses Control Risks

PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Plan Risk ManagementTABLE OF CONTENTS

1.0 Purpose Of The Risk Management Plan 2.0 RISK MANAGEMENT PROCEDURE 2.1 Process 2.2 ROLES AND RESPONSIBILITIES 2.3 Risk Identification 2.3.1 Methods for Risk Identification 2.4 Risk Analysis 2.4.1 Qualitative Risk Analysis 2.4.2 Quantitative Risk Analysis 2.5 Risk Response Planning 2.6 Risk Monitoring, Controlling, And Reporting 2.7 Risk Contingency Budgeting 3.0 TOOLS AND PRACTICES 4.0 CLOSING A RISK 5.0 LESSONS LEARNED

 

Identify Risks9

Techniques Brainstorming Interviewing Root Cause Analysis Delphi Technique – way to reach consensus of

expertsFacilitator uses a questionnaire to obtain ideasThe responses are summarized then re-circulated

to the experts for additional comments Risk Breakdown Structure – structure for identifying

risk

PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Identify Risk Risk Breakdown Structure

10

Perform Qualitative Risk Analysis11

Tool Risk Priority Matrix - probability and impact

Perform Quantitative Risk Analysis12

Tools and techniques Sensitivity Analysis – tornado diagram (useful for comparing importance and

impact of variables) Expected Monetary Value Analysis – decision tree

http://goo.gl/DXSglV Modeling and Simulation – translates uncertainties to impact of project

objectives Monte Carlo

The model is computed many times with the input variables (cost estimates, durations) chosen at random for each iteration from the probability distributions of these variables.

A probability distribution (total cost or completion date) is calculated - Example - 12% likely to meet the $41 million most likely cost

estimate or a 70% likelihood of success with a budget of $50 million

PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Plan Risk Responses

Negative risks Avoid – change plan to eliminate threat entirely

or shut down project entirely Transfer – shifts risk to third party (consultant) Mitigate – reduce probability or impact

Develop prototype Accept – not take any action

Contingency Reserve – time, money or resources

PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Plan Risk Responses

Positive Risks Exploit – ensure opportunity is realized

Most talented resources Enhance – increase the probably and/or impact

Adding more resources Share – allocating all or some of the ownership

of the opportunity Joint ventures, partnerships

Accept – take advantage of the opportunity if realized

PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Control Risk Responses

Use Risk Register to Implement risk response plans Track identified risks Identify new risks Evaluate risk process effectiveness

throughout the project – risk audits including project review meetings Deliverable statusSchedule progressCosts

PMI Global Standard. (2013). A guide to the project management body of knowledge ((5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

Application – Risk Overview Example16

http://capstone.tamu.edu/Teams/Spring%20%2708/VEG/deliverables/VEG_RiskAssessment.pdf http://goo.gl/6clVE5

Top 10 Risk IssuesDr. Dieter Fink

1. Understanding the risk concept 2. Agreeing on what is project risk 3. Recognizing risk events 4. Determining the risk management approach 5. Determining the risk tolerance 6. Preparing the risk management plan 7. Developing organizational risk processes 8. Estimating risk severity 9. Preparing the risk breakdown structure 10. Creating and updating the risk register

• Fink, D. (2011). Trends: Key Issues in Project Risk Management. TPM (February/March). Retrieved from

http://www.jkr.gov.my/prokom/images/stories/pdf/RM/trends.pdf

10 Golden Rules of Project Risk Management Bart Jutte

• 1. Make risk management part of your project• 2. Identify risks early in your project• 3. Communicate about risks• 4. Consider both threats and opportunities• 5. Clarify ownership of issues• 6. Prioritize risks• 7. Analyze risks• 8. Plan and implement risk responses• 9. Register project risks• 10. Track risks and associated tasks

Jutte, B. (2010). 10 golden rules of project risk management . Retrieved from http://www.projectsmart.com/articles/10-golden-rules-of-project-risk-management.php

Intaver InstituteRiskyProject 5

http://intaver.com/index-tutorial4.html

References

• Fink, D. (2011). Trends: Key Issues in Project Risk Management. TPM (February/March). Retrieved from

http://www.jkr.gov.my/prokom/images/stories/pdf/RM/trends.pdf• Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009.

Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271• Haughey, D. ( 2013). 21 ways to excel at project management. Retrieved

from http://www.projectsmart.com/• Jutte, B. (2010). 10 golden rules of project risk management . Retrieved from

http://www.projectsmart.com/articles/10-golden-rules-of-project-risk-management.php

• Kendrick. T. (2009). Identifying and managing project risk. New York: AMACOM.

• PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.