Project Risk Management
Ms. Faddia Hmdan
What is Risk?
• Risks are potential future events that can adversely affect a project’s
Cost, Schedule, Scope or Quality (CSSQ).
• An uncertain event, and if that event occurs, there will be a positive or
negative effect on the objectives of the project.
What is Risk?
◦Risks in projects are defined as undesired events that may cause
increased scope, delays, and spending, problems due to
resources, unsatisfactory performance, and decreased value.
What is Risk Management?
◦ Risk management is the process of identifying, assessing and controlling threats to an
organization's capital and earnings. These threats, or risks, could stem from a wide variety of
sources, including financial uncertainty, legal liabilities, strategic management errors, accidents
and natural disasters.
The Idea of Risk:
In general, risk is considered to be negative to the value of a project.
If one drives fast, there is a risk of getting a speeding ticket―a
cost that is involved. Worse still, there is a risk of getting into an
accident―a life may be in jeopardy.
Control & Risk:
• Project Manager needs to minimize the risk that the project won’t finish successfully
–generally means “on time and within budget”.
• To do so, you need measurements to help decide if the project is on track.
• If something’s wrong, you need to address what corrective action will be taken.
Risk management objectives:
• Increase the probability and impact of positive events
(opportunities).
• Decrease the probability and impact of negative events
(threat).
Risk management Process:
◦ From the initial list of identified risks, a risk register or log can be populated to
ensure that all risk items are analysed, prioritised and monitored.
◦ Risk registers should typically include the following:
Cost Possible Action
Risk type Description Probability Risk level
impact Responses owner
Determine the Probability of Risk Occurrence and
Negative Impact.
◦ Probability: is expressed as high, medium, low or as numbers.
Determining risk probability can be difficult because it’s most
commonly accomplished using expert judgment.
◦ Impact: is the amount of pain (or the amount of gain) the risk event
poses to the project. The risk impact scale can be as high-medium-low
or a numeric.
Tools and techniques to identify risks
• Brainstorming
• Cause-and-effect diagrams
• Checklists
• Mind mapping
• Lessons learned from similar projects
Risk Response Planning:
◦ Avoidance – modifying the project plan to avoid the potential condition or
occurrence.
◦ Transference – shifting the consequences and responsibilities associated with
the risk to a third party (often accomplished by contractual agreement)
◦ Mitigation – taking preventative action to reduce the probability of risk
occurrence or impact on the project
◦ Acceptance – proceeding as planned and accepting the outcome of a risk.
Internal Risks:
• Internal risks can be controlled by project managers and stakeholders.
• They originate from all phases of a project.
• Examples of internal risks: not meeting time, cost, scope, performance
and value of a project due to technological difficulties.
Eternal Risks:
• These risks are from sources outside the project.
• Project managers or stakeholders have little or no control over these risks.
• Physical risks include damage by fire, flood, or other disaster, computer virus
that infects the development environment or operational system, and a team
member who steals confidential project material and makes it available to
competitors.
Types of Risks:
▪ Legal Risks:
◦ Safety conditions, the noise.
◦ Claims by stakeholders as a result of performance errors or malfunctions in terms agreed to in contract
documents, Damage to the surrounding areas.
▪ Organizational Risks:
◦ Lack of specialized Human Resources for a particular fields, withdrawal of some individuals.
◦ Delay in requesting materials needed by the project.
Types of Risks:
▪ Technical Risks
◦ Incorrect assessment of the technology required, construction methods.
◦ Improper estimation of the quantities of materials needed to implement the project.
◦ Materials received late, Errors in execution.
▪ Financial Risks
◦ High prices of materials used in the implementation of the project. Changes in interest rates.
Inaccurate payment of obligations to implementers. Change in exchange rates.
In Conclusion:
◦ Successfully capturing all project risks increases with frequent communication
and feedback amongst team members and stakeholders. These discussions
should attempt to identify inaccuracies, contradictions and assumptions
regarding the project. The resulting of these working sessions should be the
initial list of identified risks.
THE END,
Any question ?