Risk Management Notes

Overview

• Number of elements that risks can impact– Project risks– Business risks– Technical risks

• There are a number of strategies with which to handle risk:– Proactive– Reactive– Mitigation

Proactive risk management

• Eliminating root causes of a risk to ensure it doesn't happen.– Identify and eliminate factors causing risk– Identify and prevent risks to stop them becoming

problems

Reactive Risk Management

• Reacting to situations after they have become risks– Fix on failure– Crisis management

Risk Mitigation

• Resource planning for risks IF they occur

Risk Management Process

1

2

3

4

5

Plan the risk management approach

Identify risks

Assess risks

Plan Risk Responses

Carry out risk reduction actions

Risk Register

Risk Mgt Plan

Project Obj’s Achieved

Risks & Planning

Planning

Review

Management

People

People are key throughout the process

Assess Risk

• What is the likelihood?• What is the impact?

High Low

High

Low

Likelihood

Impact

Risk ExposureRisk Exposure

Probability of unexpected loss

Size of the loss

Assessing probability Of Unexpected Loss- Delphi or group consensus- Project or system guru

opinion

Assessing the size of loss- Breakdown loss into smaller

losses. Then estimate the smaller chunks, and aggregate together.

- So a server goes down, the loss is not only the cost of the server, but the cost of the lost productivity etc.

Risk responses

• Acceptance– Let the risk happen, countermeasures are too costly.

• Avoidance/ prevention– Try to stop it happening

• Mitigation/ reduction– Reduce the impact if it happens

• Transfer– Take out insurance, get someone else to take the

burden

What is a risk register• List of risks• Their impact• Probability of it happening

Points

• Risk process is cyclical• Risks need to be constantly reassessed• The nature of risks may change as a project

goes on

Tools

• Simulation tools• Modelling tools• Estimating/scheduling tools

Questions

• What is proactive risk management?• What is reactive risk management?• What is risk mitigation?• Describe the risk management process• How do you assess a risk?• What is the formula for risk exposure?• How do you assess the size of a loss? Or the probability of a

risk?• Think of 3 risks for a project (implementing a new stock

management system to Tesco’s). Add them to a risk register.