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Flashcards in Risk Management Deck (22):

quantitative vs. qualitative risk

quantitative - delay of days, budget increase

qualitative - low, medium, high

  • qualitative first, quantitative if appropriate
    • Qualitative analysis may be enough to show a risk is either acceptable or unacceptable


pro-actively minimising the probability and impact of risks, leads to ...

  • increases opportunity
  • improves supplier negotiation
  • better scheduling and budgeting
  • clearly defined ownership for each risk
  • less stressful environment


when does risk management occur in the project cycle


  • During the initiation the risks are identified
  • Output is a risk management plan


What does the risk management plan contain?

  • Criteria for acceptability and tolerability (score board)
  • Risk register
  • Internal and external interfaces


What does the risk management plan require to start with?

  • project needs to be well defined
  • corporate risk policies may be followed


Techniques for risk identification

Document extensitvely and Review

  • Assumption analysis
  • Other project documentation (inside or outside the organisation)

Ask people

  • Team (kick-off meeting, brainstorming)
  • Interviews with stakeholders, questionnaires
  • Delphi technique


  • SWOT analysis
  • Cause Effect Analysis


What is the Delphi Technique + pros and cons?

asking a panel of experts successively

a method of group decision-making and forecasting that involves successively collating the judgments of experts


  • Can be done “remotely”
  • Final position is agreed


  • Need good experts
  • Time-consuming
  • Needs a good facilitator


Cause & Effect Analysis / Fishbone Diagram / Ishikawa Diagram

  • Finds root cause and expose common risk areas
  • Diagrams can help show the thinking
  • Useful (facilitated) group activity


Articulating risks

A. An [ external event ] occurs, …

B. because [ interacting with an aspect of the project ], which …

C. causes a significant [ effect ] on the objectives.


  • Sentences like this can be managed
  • Vague risk descriptions just cause fear, doubt, etc.
  • Use such sentences for assessment and in risk register


Assessing risks structurally

  • risk events linked?
  • shared root causes?
  • Can risks be combined / single response strategy?
  • Use project network to identify risk interdependence


Assessing risks owership-wise

  • Who is responsible for managing the risk?
    • including further evaluation/response strategy
  • Particular importance is whether customer or supplier is responsible
    • will be reflected in contractual requirements
  • Responsibility may be changed at response strategy stage (if good response, less risk)


one qualitative risk assessment technique

Probability-Impact Matrix


P-I Matrix: assigning scores for each scale point 

  • probability score grows in an arithmetic scale (+2) 
  • impact score grows in an geometric scale (x2)
    • this emphasises the relevance of the impact.

Low probability, high impact risks are more relevant than risks with high probability and low impact.


Type of Risk:

  • Requirements
  • Technical
  • Resource
  • Information
  • Supplier


Look for concentration of risk in particular area(s), like ...

  • Time / Cost / Quality
  • PBS / WBS / OBS
  • Requirements/Technical/Resource/Information/Supplier


planning responses

  • Identify options (treatment strategies)
    • should be SMART
    • consider effect on project objectives
  • Cost / Benefit evaluation
  • Prepare action plans
  • Finalise and agree risk owner


What are threats and what to do with them?

Threats are risks with adverse consequences

may have more than one treatment for each risk

  • Accept – do nothing (if very low risk)
  • Avoid – change or abandon goals, processes or activities and replace with alternatives that remove the risk (e.g., exchange material used).
  • Reduce probability – look at cause / effect analysis and take action.
  • Reduce impact – develop plans for responding to the threat if it occurs (recovery plan).
  • Share or transfer – share risks in part or full with another stakeholder. For example, passing back time / cost overrun risks to a contractor (see Procurement session, contract pricing methods); taking out insurance against fire, theft, loss, damage, etc.


What are opportunities and how to handle them?

Opportunities are risks with positive consequences

tendency to focus on threats

  • Reject – may be too small or too large to be worth exploiting.
  • Exploit – change the project scope to take advantage of the opportunity should the event come to pass (e.g., market research shows interest in an additional product).


What is a Risk Register / Risk Log

when is it created

+ characteristics

+ example layout

Key output of risk management process

  • A summary of all risks and their status
  • continually reviewed
  • Full version of register prepared at definition phase



Implementation Response

  • Ensure risk owner takes responsibility for actions
  • Establish contingency fund (money set aside for risks) 


risk vs. issue

  • risks = what might happen
  • issues = what is happening

risks become issues if the "risk event" happens


Issue management process

(5 phases)

Definition: How are issues going to be managed throughout the project?

  • How issues will be raised and managed, and the process of escalation of issues to the next managerial level.

Identification: What is the issue and what is its impact? 

  • Issue Log
    • Who has raised the issue and when
    • What the impact of the issue is on the project’s goals
    • Who is responsible for resolving the issue
    • What has been done to resolve it, and the date it has been resolved

Escalation: Who has responsibility for resolving the issue?

Monitoring and reporting: what is happening to resolve the issue?

  • Keep updating issue log.

Resolution: how has the issue been resolved?

  •  Issues may be resolved in a number of ways:
    •  change to objectives in terms time, cost, or quality
    •  the project schedule may be changed to cope with availability of resources
    •  further activities may be generated