One attribute of a project is that it involves a degree of uncertainty. Such uncertainty can impact the outcome of a project. Risk is an uncertain event that, if it occurs, can jeopardize accomplishing the project objective. Risk management involves identifying, assessing, and responding to project risks in order to minimize the likelihood of occurrence and/or potential impact of adverse events on the accomplishment of the project objective. Addressing risks proactively will increase the chances of accomplishing the project objective. Waiting for unfavorable events to occur and then reacting to them can result in panic and costly responses. Managing risk includes taking action to prevent or minimize the likelihood of occurrence or the impact of such unfavorable events. A project manager cannot be risk averse. They must accept that risk is a part of project management and must address it head-on. Furthermore, the project manager needs to set the tone for encouraging open and timely discussion of risks among the project team. 1.) Identify Risks A risk is an uncertain event that, if it occurs, can jeopardize accomplishing the project objective. Risk identification includes determining which risks may adversely affect the project objective and what the impact of each risk might be if it occurs. Sometimes a sponsor identifies major risks in the project charter when the project is authorized. A common approach to identifying the sources of risks is brainstorming. The risks should be those that are somewhat likely to occur and/or can have a significant negative impact on accomplishing the project objective. Establishing risk categories may help to identify and evaluate risks. Some categories are technical, schedule, cost, human resources, external, or sponsor/customer. Historical information from past projects is another source that can be helpful in identifying possible risks. The project team can progressively elaborate on an identify new risks, as well as the estimated impacts of previously identified risks, as more information is known or becomes clear. 2.) Assess Risks Risk assessment includes determining the likelihood that the risk event will occur and the degree of impact the event will have on the project objective. Risks can then be prioritized based on their likelihood of occurrence and degree of impact. Risks on the critical path should be given higher priority, because if they occur, they will have a greater impact on the schedule than will activities on a path that has a large positive value of total slack. 3) Risk Response Development Com No C 3.) Risk Response Development A risk response plan is a defined set of actions to prevent or reduce the likelihood of occurrence or the impact of a risk, or to implement if the risk event occurs. Risk response planning means developing an action plan to reduce the likelihood of occurrence or potential impact of each risk, establishing a trigger point for when to implement the actions to address each risk, and assigning responsibility to specific individuals for implementing each response plan. A risk response plan can be to avoid the risk, to mitigate the risk, or to accept the risk. Project prices and budgets should include a contingency or management reserve to pay additional costs associated with implementing response plans. 4.) Risk Response Control Typically, the results of the first three steps of the risk management process are summarized in a formal document often called the risk register. A risk register details all identified risks, including descriptions, category, probability of occurring, impact, responses, contingency plans, owners, and current status. The register is the backbone for the last step in the risk management process: risk control. Risk control involves executing the risk response strategy, monitoring triggering events, initiating contingency plans, and watching for new risks. Establishing a change management system to deal with events that require formal changes in the scope, budget, and/or schedule of the project is an essential element of risk control E-text book Figure 7.8 depicts a risk assessment matri, a tool for assessing and managing risks. Assignment: Please identify and assess your projects risks and input into a Risk Response Matrix Please list 3-5 risks. (see Figure 7.8 as an example). Upload to Canvas. Figure 7.8. FIGURE 7.8 Risk Response Matrix re 7.8. SURE 7.8 Risk Response Matrix Risk Event Response Interface problems Mitigate: Test prototype System freezing Mitigate: Test prototype User backlash Mitigate: Prototype demonstration Equipment malfunctions Mitigate: Select reliable vendor Transfer: Warranty Contingency Plan Work around until help comes Reinstall OS Increase staff SU, Order replacement Trigger Not solved within 24 hours Still frozen after one hour Call from top management Equipment fails Who Is Responsible Nils Emmylou Eddie Jim One attribute of a project is that it involves a degree of uncertainty. Such uncertainty can impact the outcome of a project. Risk is an uncertain event that, if it occurs, can jeopardize accomplishing the project objective. Risk management involves identifying, assessing, and responding to project risks in order to minimize the likelihood of occurrence and/or potential impact of adverse events on the accomplishment of the project objective. Addressing risks proactively will increase the chances of accomplishing the project objective. Waiting for unfavorable events to occur and then reacting to them can result in panic and costly responses. Managing risk includes taking action to prevent or minimize the likelihood of occurrence or the impact of such unfavorable events. A project manager cannot be risk averse. They must accept that risk is a part of project management and must address it head-on. Furthermore, the project manager needs to set the tone for encouraging open and timely discussion of risks among the project team. 1.) Identify Risks A risk is an uncertain event that, if it occurs, can jeopardize accomplishing the project objective. Risk identification includes determining which risks may adversely affect the project objective and what the impact of each risk might be if it occurs. Sometimes a sponsor identifies major risks in the project charter when the project is authorized. A common approach to identifying the sources of risks is brainstorming. The risks should be those that are somewhat likely to occur and/or can have a significant negative impact on accomplishing the project objective. Establishing risk categories may help to identify and evaluate risks. Some categories are technical, schedule, cost, human resources, external, or sponsor/customer. Historical information from past projects is another source that can be helpful in identifying possible risks. The project team can progressively elaborate on an identify new risks, as well as the estimated impacts of previously identified risks, as more information is known or becomes clear. 2.) Assess Risks Risk assessment includes determining the likelihood that the risk event will occur and the degree of impact the event will have on the project objective. Risks can then be prioritized based on their likelihood of occurrence and degree of impact. Risks on the critical path should be given higher priority, because if they occur, they will have a greater impact on the schedule than will activities on a path that has a large positive value of total slack. 3) Risk Response Development Com No C 3.) Risk Response Development A risk response plan is a defined set of actions to prevent or reduce the likelihood of occurrence or the impact of a risk, or to implement if the risk event occurs. Risk response planning means developing an action plan to reduce the likelihood of occurrence or potential impact of each risk, establishing a trigger point for when to implement the actions to address each risk, and assigning responsibility to specific individuals for implementing each response plan. A risk response plan can be to avoid the risk, to mitigate the risk, or to accept the risk. Project prices and budgets should include a contingency or management reserve to pay additional costs associated with implementing response plans. 4.) Risk Response Control Typically, the results of the first three steps of the risk management process are summarized in a formal document often called the risk register. A risk register details all identified risks, including descriptions, category, probability of occurring, impact, responses, contingency plans, owners, and current status. The register is the backbone for the last step in the risk management process: risk control. Risk control involves executing the risk response strategy, monitoring triggering events, initiating contingency plans, and watching for new risks. Establishing a change management system to deal with events that require formal changes in the scope, budget, and/or schedule of the project is an essential element of risk control E-text book Figure 7.8 depicts a risk assessment matri, a tool for assessing and managing risks. Assignment: Please identify and assess your projects risks and input into a Risk Response Matrix Please list 3-5 risks. (see Figure 7.8 as an example). Upload to Canvas. Figure 7.8. FIGURE 7.8 Risk Response Matrix re 7.8. SURE 7.8 Risk Response Matrix Risk Event Response Interface problems Mitigate: Test prototype System freezing Mitigate: Test prototype User backlash Mitigate: Prototype demonstration Equipment malfunctions Mitigate: Select reliable vendor Transfer: Warranty Contingency Plan Work around until help comes Reinstall OS Increase staff SU, Order replacement Trigger Not solved within 24 hours Still frozen after one hour Call from top management Equipment fails Who Is Responsible Nils Emmylou Eddie Jim