Summary: Prepare of a Risk Management Plan Need to read Risk Management Chapter PPT brainstorm and prepare Risk Break Down Structure Identification of Project risk and issues and processing it through your risk management plan

Overview - provide why and where you are in the project Project risk funding Planning Identification Analysis Risk Response Development - you will need to show risk response strategy and specific option, status, owner Risk Response Implementation Monitoring

kindly see attached slides

RISK VS. ISSUE RISK Risk . Uncertain outcome, with respect to something of value . Risk = Impact x Likelihood Issue ISSUE . Issue is something that is currently occurring CONFIDENTIAL DRAFT NOT FOR DISTRIBUTION. FOR DISCUSSION PURPOSES ONLY. 1EMERGING PRACTICES IN PROJECT RISK MANAGEMENT 1. Non-event risks - Most projects only focus on risks that are uncertain future events that may or may not occur. For example a key vendor may go out of business during the project a) Variability risk - uncertainty exists about some key characteristics of a planned event or activity or decision. For example productivity maybe above or below the target Ambiguity risk - Uncertainty exists about what might happen in the future - This is typically addressed through Monte Carlo analysis (probability distribution) 2. Project Resilience - The existence of emergent risk is becoming clear with a growing awareness of so-called unknowable-unknowns. These are risks that can only be recognized after they have occurred. This requires each project to have a) Right level of budget and schedule contingency for emergent risks, in addition to specific risks b) Flexible project processes that can cope with the emergent risks while maintain overall direction toward the project goals C ) Empowered project team that has clear objectives d) Frequent review of early warning signs to identify emergent risk e) Clear input from stakeholders to clarify areas where the project scope or strategy can be adjusted in response to emergent risksEMERGING PRACTICES IN PROJECT RISK MANAGEMENT CONT'D Integrated Risk Management Proiects exist in organizational context, that may form part of program or portfolio. Risk exist at each of these levels, and risks should be owned and managed at the appropriate level. Some risks identified at higher level will be delegated to the project team for management. A coordinated approach to enterprise-wide risk management ensures alignment and coherence in the way risk is managed across all levels. This builds risk efficiency into the structure of programs and portfolios, and providing greatest overall value for a given level of risk exposure. PROJECT RISK MANAGEMENT Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring risk on a project. The objectives of project risk management are to increase the probability and / or impact of positive risk and to decrease the probability of and / or impact of negative risks, in order to optimize the chances of project success.PLAN RISK MANAGEMENT Plan Risk Management is the process of defining how to conduct risk management activities for a project. The Plan Risk Management process should begin when a project is conceived and should be completed early in the project. It maybe necessary to revisit this process later in the project life cycle, for example a major phase change, or if the project scope changes significantly. The key benefit of this process is that it ensures that the degree, type, and visibility of risk management are proportionate to both the risk and the importance of the project to the organization and other stakeholders.RISK MANAGEMENT PROCESS Risk Manageme nt Plan Proiect Risk Management Processes: l. 2' Plan Risk Management The process of defining how to conduct risk management activities Identify Risks The process of identifying individual project risks as well as sources of overall project risk, and documenting their characteristics Perform Qualitative Risk Analysis Perform Quantitative Risk Analysis based on numeric analysis Plan Risk Responses The process of developing options, selecting strategies, and agreeing on actions to address Implement Risk Responses The process of agreed-upon risk response plans Monitor Risks The process of monitoring the implementation of agreed-upon risk response plans, tracking identified risks, identifying and analyzing new risks, and evaluating risk process effectiveness throughout the project. PLAN RISK MANAGEMENT 4.1 Develop Project Charter . Project charter Project Management Plan Project management plan . All components 111 Project Plan Risk Management Management . Fisk management plan Plan Project Documents Project documents Stakeholder register Enterprise/ Organization . Enterprise emtionmental factors Orpentagonel process assets Plan Risk Management process should begin when a project is formed and should be completed early in the project.ORGANIZATIONAL PROCESS ASSETS Organizational risk policy Risk categories, possibly organized into a risk breakdown structure Definition of risk concepts Common template for risk management plan Roles & responsibilities Authority levels for decision making Lessons learned from previous proiects RISK MANAGEMENT PLAN COMPONENTS 1 . Risk Strategy 2 . Framework 3. Roles & Responsibilities 4. Funding 5. Timing 6. Risk Categories - e.g. Risk Break Structure 7 . Stakeholder risk appetite - should be expressed as measurable risk threshold around each project objective 8. Definitions of risk probability and impacts 9 . Probability and impact matrix 10. Reporting formats 11. TrackingTHE RISK MANAGEMENT PROCESS Slap 1 Risk Identification Analyze the project to identity sources oi risk Known risks Step 2 Risk Assessment New risks Assess risks in terms of: ~ Severity at impact 0 Likelihood oi occurring - Controllability Risk assessment Step 3 Risk Response Development - Develop a strategy to reduce possible damage ' Develop contingency plans New risks Risk management plan Step 4 Risk Response Control New I'ISKS ' Implement risk strategy - Monitor and adiust plan tor new risks - Change management ENTERPRISE ENVIRONMENTAL FACTORS Enterprise environmental factors are internal and external environmental factors that can influence a project's success, including: Organizational culture Organizational structure Internal and external political climate Existing human resources Available capital resources Regulatory environment Financial and market conditions RISK IDENTIFICATION Generate a list of all the possible risks that could affect the project through brainstorming and other problem identifying techniques. Focus on the events that could produce consequences, not on project objectives. Use risk breakdown structure (RBS) in conjunction with work breakdown structure (WBS) to identify and analyze risks. Identify the macro risks first then specific areas can be checked. Use risk profile (a list of questions) to address traditional areas of uncertainty on a project.Schedule Delays TIME Force Majeure Changes Shortages PEOPLE Labor Strikes Skills Deficiency Escalation COSTS Estimating Errors Penalty Exposure Exchange Rates RISK WBS Prob. of Tech Success DELIVERABLES Component Issues Unproven Design Performance QUALITY Warranty Exposure Subcontractor Items Lack of Clarity CONTRACT Disputes Subcontractor Failures Funding MARKET Prob, of Comm. Success Window of OpportunityRISK BREAK-DOWN STRUCTURE (RBS) Project Project Customer Technical External Organizational Management Subcontractors Project Requirements Estimating Acceptance and suppliers dependencies Technology Regulatory Resources Planning Coordination Complexity and Market Funding Controlling Training interfaces Performances Customer Prioritization Communication Support and reliability Quality WeatherRBS LEVEL O RBS LEVEL 1 RBS LEVEL 2 1.1 Scope definition General Major Categories for Project Risks 1.2 Requirements definition 1.3 Estimates, assumptions, and constraints 1. TECHNICAL RISK 1.4 Technical processes 1. Technical Risk 1.5 Technology 1.6 Technical interfaces 2. Management Risk Etc. 2.1 Project management 3. Commercial Risk 2.2 Program/portfolio management 4. External Risk 2.3 Operations management 2. MANAGEMENT RISK 2.4 Organization 2.5 Resourcing 2.6 Communication O. ALL SOURCES OF Etc. PROJECT RISK 3.1 Contractual terms and conditions 3.2 Internal procurement 3.3 Suppliers and vendors 3. COMMERCIAL RISK 3.4 Subcontracts 3.5 Client/customer stability 3.6 Partnerships and joint ventures Etc. 4.1 Legislation 4.2 Exchange rates 4.3 Site/facilities 4. EXTERNAL RISK 4.4 Environmental/weather 4.5 Competition 4.6 Regulatory Etc.EXAMPLE OF DEFINITIONS FOR PROBABILITY & IMPACTS +/- IMPACT ON PROJECT OBJECTIVES SCALE PROBABILITY TIME COST QUALITY Very High 70% >6 months Very significant impact on overall functionality High 51-70% 3-6 months $1M-$5M Significant impact on overall functionality Medium 31-50% 1-3 months $501K-$1M Some impact in key functional areas Low 11-30% 1-4 weeks $10OK-$500K Minor impact on overall functionality Very Low 1-10% 1 week SHOOK Minor impact on secondary functions Nil