LO10 Risk Management

Question 1

Response to threat

Answer 1

Accept
Reduce
Transfer
Avoid

Question 2

Response to opportunity

Answer 2

Reject
Enhance
Share
Exploit

Question 3

Transfer risk

Answer 3

Passes responsibility to another party
Reduces risk if other party more capable of managing risk
Not always possible to transfer all the risk - residual risk on both sides
Contracts / incentives

Question 4

Reduce risk

Answer 4

Action planned in advance
Tackle source of risk
Preventative but investment (cost / time)
Cost must be justified
Reduce probability or impact

Question 5

RMP - Identification

Answer 5

Capture risks
Right stakeholders and most effective methods / techniques
Brainstorming / workshops
Cause, risk event, effect - allows targeted mitigation
Risk log

Question 6

RMP - Assessment

Answer 6

Understand probability and impact = severity
Represent inherent risk (before mitigation) - feeds into prioritisation
Consider window when risk could occur - schedule response.
Calculate overall project risk - supports governance
Reassess after response planned / applied = residual risk

Question 7

RMP - Plan response

Answer 7

Proactive or reactive
Maximise opportunities, minimise threats
Practical response - effective in cost vs benefit terms - assign owner.
Reactive = contingency (time / money)
Contractual sharing - both parties work together to minimise threats, win-win.

Question 8

2 reasons for escalating issues

Answer 8

1. When tolerance of delegated work have been or will be exceeded.
2. To get support to resolve issues

Question 9

Benefits of a RMP

Answer 9

1. Better informed and more reliable plans, schedules and budgets.
2. Leads to use of most suitable type of contract. (Fixed prices = supplier risk, cost plus = customer risk)
3. Discourages acceptance of financially unsound projects.

Question 10

Enhance probability / impact

Answer 10

Make opportunity more likely to occur or impact greater.
Strategic e.g. design in-house to increase control or tactical e.g. optimise resource to increase probability of reduced cost.
E.g. increased training - greater impact in terms of efficiency - higher production.

Question 11

Exploit an opportunity

Answer 11

Change scope to achieve beneficial outcome.
Fixed price contract - supplier may exploit opportunity to reduce cost and increase profit.
Copyright.

Question 12

Issue management - Log and assess new issue

Answer 12

Issue log.
Rapid analysis - understand nature, cause, impact,
Delays may increase impact.
Assess and prioritise for impact on time, cost, risk and benefits.

Question 13

Issue management - Escalate issues

Answer 13

Escalate to sponsor, sponsor escalate to governance board.
Key aspect of governance.
Update issue log - date of escalation and status.
Escalate as soon as possible - avoid delays to resolution and action.

Question 14

Issue management - actions agreed and assigned

Answer 14

Sponsor / governance board makes decision and assigns implementing actions.
Clear timescales and milestones
Any changes to baseline plan where delegated tolerances breached managed via change control process.
Action plans so resolution strategy can be implemented and tracked.