Summary Topics: Risk Management

A risk is an uncertain potential condition or event that, if it occurs and is not mitigated, may have negative or positive impact on the project objectives. Strategic Program projects and operational risks are the 4 types of risks. Risk Management is a methodology that helps managers make best use of their available resources. It is now an integral part of project management. Better service delivery effective management of change are some of advantages of risk management.The main steps of risk management are Risk Management Planning ,Risk identification ,Qualitative risk analysis, Quantitative risk analysis Risk response planning and Risk Monitoring & Control. Qualitative Risk Analysis assesses the priority of identified risks using their probability of occurring, the corresponding impact on project objectives if the risks do occur, as well as other factors such as the time frame and risk tolerance of the project constraints of cost, schedule, scope, and quality. In quantitative risk assessments, the goal is to try to calculate objective numeric values for each of the components gathered during the risk assessment and cost benefit analysis. These processes interact with each other and with the processes in the other knowledge areas. Risk Assessment is the first of two stages in Project Risk Management and includes three main steps as follows: Identifying risks, analyze and priority settings. They are addressing project scope, quality cost time and budget. Risk sensitivity analysis determines which risks have the greatest effect on the project objectives and Examines effect of uncertainty in individual project elements. Decision trees are like flowchart diagrams and represent a method of looking at many options and making a decision. By analyzing the impact each decision will have, the risks of taking that decision can be forecast and used to anticipate problems or inform the direction that the project may take. Decision trees technique is best suited to simpler situations. In complex scenarios they can become confusing and complicated. Once risk is identified it is also important how it is responded. Best possible option is eliminating risk if it is not possible then mitigates or reduced the risk. Transferring or deflecting risk to another part is the last option. Risks can be mitigated not only by eliminating the risk but also by reducing their degree of Occurrence and/or lessen the Impact to the project. Insurance Retention Bonds are the different ways to deflect the risk. Futures for projects involving multi-currency transactions you can offset the effects of currency fluctuations by paying a premium to purchase currency at an agreed rate in the future. Risk auditors examine and document the effectiveness of the risk response in avoiding, transferring, or mitigating risk occurrence as well as the effectiveness of the risk owner. Risk audits are performed during the project life cycle to control risk. Deviation, such as not demonstrating functionality as planned at a milestone, can imply a risk to achieving the project's scope. Following are the outcomes of risk monitoring and control workaround plans, corrective action, project change requests etc. Project decision makers and project team members are more likely to respond to formally written information than on verbally communicated project concerns. They become more involved in the risk if it is documented and contained in project documentation. The main output of the risk

identification process is a list of identified risks and other information needed to begin creating a risk register.