I am kind of lost about this question Explain four approaches for dealing with risk threats After reading the class notes and couple of relevant article, I get confused to answer the mentioned question If anyone can help me out with the answer of the question that will be a great help for my preparation the necessary lecture notes and article links are given below Seven Processes of Project Risk Management Risk management planning Need to know the risk involved before selecting a project At first, the focus is on externalities Track and estimate project survival Project risks take shape during the planning Often handled by a project office Types of risks Preventable Strategy External Risk identification Identify risk factors Risk is dependent on technology and environmental factors Identify risk impact analysis Delphi method is useful for identifying project risks Other methods include brainstorming, nominal group techniques, checklists, attribute listing, and EWS May also use cause effect diagrams, flow charts, influence charts, SWOT analysis Qualitative risk analysis The purpose is to prioritize risks A sense of the impact is also needed Each objective should be scaled and weighted Construct a risk matrix (Figure 7 6) Quantitative risk analysis More precise than qualitative Typically more accurate Three techniques Failure Mode and Effect Analysis Decision Tree Analysis Simulation Risk response planning Threats Avoid to eliminate the threat entirely Transfer to remove the project contractor from the danger of the threat (i e , insurance, warranty, etc ) Mitigate softening of the danger of the threat Accept create contingency plan Opportunities Exploit To increase the probability the opportunity will occur Share Joint ventures and risk sharing partnerships Enhance Increase the probability that the opportunity risk will occur or increase its impact if it does Accept Not willing to invest the resources to improve the probability or impact of the opportunity occurring Risk monitoring and control Monitor residual risks, identify new risks, execute risk reduction plans, and evaluate their effectiveness throughout the project life cycle Should track the followings How often a risk assessment is conducted updated How often a risk assessment is reviewed The number of risks initially rated as low that later became high The percentage of actual risks that developed that had been identified beforehand Risk reassessment and risk audit The risk management register Creates a permanent register of identified risks, methods used to mitigate or resolve them, and the results of all risk management activities Tasks Environments that may impact projects Assumptions made Risks identified List of categories and keywords Estimates on risk, states of project's environment, or on project assumptions Minutes Actual outcomes Quantitative Risk Assessment Failure Mode and Effect Analysis (FMEA) List the possible ways a project can fail Evaluate severity (S) Estimate likelihood (L) Estimate the inability to detect (D) Find the risk priority number (RPN) (RPN S L D) Consider ways to reduce the S, L, and D for each cause of failure Decision Tree Analysis This is a relatively simple tool used in situations where sequential events happen over time They can incorporate multiple decisions and probabilities for each Try this Excel add into learn more about how to use the decision tree analysis https treeplan com General Simulation Analysis Simulation combined with sensitivity analysis is useful for evaluating projects Should avoid full cost philosophy Some overheads are not affected by changes The analysis gives a picture in terms of costs and times that will be affected Project is then reviewed using simulation Monte Carlo Simulation See this tutorial to learn about Monte Carlo Simulation https support office com en us article introduction to monte carlo simulation in excel 64c0ba99 752a 4fa8 bbd3 4450d8db16f Sensitivity Analysis what if analysis The process includes going back into the model to change one parameter and see an impact on the final result Weakness In reality, a single change in environment doesn't happen There is also scenario sensitivity analysis Dealing With Project Disasters What to do if a loss is catastrophic Even if the probability is low Buy insurance What if insurance isn't available Four approaches for project disaster planning Risk analysis Contingency planning Developing logic charts Tabletop Exercises Read these articles to learn about risks associated with software projects https hbr org 2011 09 why your it project may be riskier than you think Managing Software Projects at AT T common risks and pitfalls https www pmi org learning library managing software projects common risk pitfalls 7876 Find this article in Google Scholar to learn about software risks and estimation models Laqrichi, S , Gourc, D , Marmier, F (2015) Toward an effort estimation model for software projects integrating risk

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 27, 2024

I am kind of lost about this question Explain four approaches for dealing with risk threats. . After reading the class notes and couple

I am kind of lost about this question "Explain four approaches for dealing with risk threats.". After reading the class notes and couple of relevant article, I get confused to answer the mentioned question. If anyone can help me out with the answer of the question that will be a great help for my preparation. ** the necessary lecture notes and article links are given below: Seven Processes of Project Risk Management

Risk management planning
- Need to know the risk involved before selecting a project
- At first, the focus is on externalities
  - Track and estimate project survival
- Project risks take shape during the planning
- Often handled by a project office
- Types of risks
  - Preventable
  - Strategy
  - External
Risk identification
- Identify risk factors
  - Risk is dependent on technology and environmental factors
- Identify risk impact analysis
- Delphi method is useful for identifying project risks
- Other methods include brainstorming, nominal group techniques, checklists, attribute listing, and EWS.
- May also use cause-effect diagrams, flow charts, influence charts, SWOT analysis.
Qualitative risk analysis
- The purpose is to prioritize risks
- A sense of the impact is also needed
- Each objective should be scaled and weighted
- Construct a risk matrix (Figure 7.6)
Quantitative risk analysis
- More precise than qualitative
- Typically more accurate
- Three techniques:
  - Failure Mode and Effect Analysis
  - Decision Tree Analysis
  - Simulation
Risk response planning
- Threats
  - Avoid: to eliminate the threat entirely.
  - Transfer: to remove the project contractor from the danger of the threat (i.e., insurance, warranty, etc.)
  - Mitigate: "softening" of the danger of the threat
  - Accept: create contingency plan
- Opportunities
  - Exploit: To increase the probability the opportunity will occur.
  - Share: Joint ventures and risk-sharing partnerships
  - Enhance: Increase the probability that the opportunity risk will occur or increase its impact if it does
  - Accept: Not willing to invest the resources to improve the probability or impact of the opportunity occurring.
Risk monitoring and control
- Monitor residual risks, identify new risks, execute risk reduction plans, and evaluate their effectiveness throughout the project life cycle.
- Should track the followings:
  - How often a risk assessment is conducted/updated
  - How often a risk assessment is reviewed
  - The number of risks initially rated as low that later became high
  - The percentage of actual risks that developed that had been identified beforehand.
- Risk reassessment and risk audit
The risk management register
- Creates a permanent register of identified risks, methods used to mitigate or resolve them, and the results of all risk management activities
- Tasks
  - Environments that may impact projects
  - Assumptions made
  - Risks identified
  - List ofcategoriesandkeywords
  - Estimates on risk, states of project's environment, or on project assumptions
  - Minutes
  - Actual outcomes

Quantitative Risk Assessment

Failure Mode and Effect Analysis (FMEA)
- List the possible ways a project can fail
- Evaluate severity (S)
- Estimate likelihood (L)
- Estimate the inability to detect (D)
- Find the risk priority number (RPN) (RPN = S L D)
- Consider ways to reduce the S, L, and D for each cause of failure
Decision Tree Analysis
- This is a relatively simple tool used in situations where sequential events happen over time. They can incorporate multiple decisions and probabilities for each.
- Try this Excel add-into learn more about how to use the decision tree analysis:https://treeplan.com
General Simulation Analysis
- Simulation combined with sensitivity analysis is useful for evaluating projects
- Should avoid full-cost philosophy
  - Some overheads are not affected by changes
- The analysis gives a picture in terms of costs and times that will be affected
- Project is then reviewed using simulation
Monte Carlo Simulation
- See this tutorial to learn about Monte Carlo Simulation:https://support.office.com/en-us/article/introduction-to-monte-carlo-simulation-in-excel-64c0ba99-752a-4fa8-bbd3-4450d8db16f
Sensitivity Analysis
- what-if analysis
- The process includes going back into the model to change one parameter and see an impact on the final result
  - Weakness: In reality, a single change in environment doesn't happen
  - There is also "scenario sensitivity analysis"

Dealing With Project Disasters

What to do if a loss is catastrophic?
- Even if the probability is low
Buy insurance
What if insurance isn't available?
Four approaches for project disaster planning
- Risk analysis
- Contingency planning
- Developing logic charts
- Tabletop Exercises

Read these articles to learn about risks associated with software projects

https://hbr.org/2011/09/why-your-it-project-may-be-riskier-than-you-think
Managing Software Projects at AT&T: common risks and pitfalls:https://www.pmi.org/learning/library/managing-software-projects-common-risk-pitfalls-7876
Find this article in Google Scholar to learn about software risks and estimation models: Laqrichi, S., Gourc, D., & Marmier, F. (2015). Toward an effort estimation model for software projects integrating risk.