SECTION 8
project
risk
management
group 7
FANILAG, GENERALAO,
VERLENE ANN KATHLEEN
GOMONIT, PACANON,
KATHLENE JAY ANN
MAE
Risks are present in all
projects, whatever their
size or complexity and in
whatever industry or
business sector. Risks are
those factors that might
cause a project to fail to
meet its objectives. Once
identified and assessed,
risks need to be managedso
that they do not have a big
impact on a project.
8.2 PROJECT RISK
8.1 PROJECT RISK
MANAGEMENT
✓ are defined as the ✓ The process concerned with
undesirable event, the identifying, analysing and
responding to project risk
chance this event might
✓ Should be performed on a
occur and the regular basis throughout the
consequences of all project
possible outcomes.
8.3 EFFECTIVE RISK
MANAGEMENT
1. Identify
Uncertainties
2. Analyze Risk
3. Prioritize Risk
4. Mitigate Risk
5. Plan for
Emergencies
[Link] and
Control
8.4 RISK MANAGEMENT
MAJOR STEPS
1. Identification 2. Assessment
✓ Identify all the possible risk ✓ Asses each risk in terms of
events that could affect the probability, impact severity and
project controllability.
✓ Internal risks: things that the ✓ Involves risk analysis to
team can control or influence. develop understanding of each
✓ External risks: things beyond risk, its consequences and the
the control or influence of the likelihood of those consequences.
team. ✓ Involves evaluating risks and
✓Risk identification may be risk interactions to make a
accomplished by identifying decision about the level of priority
Causes-and-effects: what could of each risk
happen and what will occur ✓ Assess the range of possible
Effects-and-causes: what project outcomes and determines
outcomes are to be avoided or which risk events warrant
encouraged and how each might response
occur
8.5 essential steps for performing
assessment
2. .Identify [Link] 6. Assess
[Link] events that 3. inherent
residual
relevant could affect Determin likelihood
likelihood
business the e risk 4. Assess and impact
achievemen of risks and impact
objective tolerance
t of portfolio of of risks
s objectives risks and
determine
risk
8.6 mitigation
✓ Develop a strategy and/or
contingency for responding to each risk.
Mitigation Option Examples
•Implement quality assurance
•Review contract conditions.
✓Reduce the • Conduct further project analysis
Probability . •Increase supervision requirements.
•Regularly analyze the project
environment. •Partnering/teaming
agreements.
•Contingency planning.
✓Reduce the •Provide greater cost and
Consequences time contingencies.
• Increase charge for
project
8.6 mitigation
Mitigation Option Examples
•Sub Contract some of the risky parts
√Transfer the risk. of the project.
•Risk sharing agreements with
customer, other companies or
Government agencies
•Umbrella Insurance
√Accept the risk. •Management of the risk
using existing procedures.
√Avoid the risk. • Cease the activity
affected b the risk.
Typical Risk Categories:
Useful Checklist
1. Technical Feasibility
➤ Organizational lack of familiarity with the
technology
➤ Relative level of technical complexity > Maturity
of the technology (new vs. tried and tested)
➤ Interconnectivity of technology with existing
systems
➤ Existing assets are underutilized in this project
Obsolete approach for program delivery
➤ Customer demand projections incorrect
➤ Uncertainty over ownership and control
2. Political and External Market
➤ Regulatory Environment Unfavorable
Organizational changes in priorities
➤ Viability of project Changes in decision
makers Natural Hazards
➤ Political changes (new laws, tax policies
etc.)
Typical Risk Categories:
Useful Checklist
3. Financial and Economic
➤ Project costs can exceed budget High
inflation or cost increases Cash flow profile
unfavorable
➤ Funding not approved
beneficiaries/stakeholders
4. Legal and Contractual
➤ Breach of contract/termination
➤ Penalty clauses
➤ Excessive warranties
➤ Contract claims/failure to perform
➤ Contract disputes inadequate
escalation procedure
➤ Excessive liability
➤ Team unfamiliar with procurement
method
Typical Risk Categories:
Useful Checklist
5. Human Behavior
➤ Unavailability of Internal technical
knowhow
➤ Unavailability of External technical
expertise
➤ Lack of staff support for project
➤ Delays
6. Scopein and
partner-beneficiary
Schedule approvals
➤ Delays in documentation
➤ Unreality of stated deadline
➤ Inadequate project definition
➤ Standards incompatible with
requirements
➤ Design incorporates materials high
maintenance
➤ Lack of resource availability
➤ Poor coordination of resources
➤ Requirement inflexibility
Typical Risk Categories:
Useful Checklist
7. Project Organization
➤ Unavailability of key project personnel
➤ Change of key volunteers
Unsatisfactory choice of subcontractors
➤ Engineering design not kept to
schedule >>>> Inadequate coordination
of partners and subcontractors Staff not
trained in time
➤ Inadequate
8. Security andcontract documentation
Cultural/Societal
➤ Heterogeneous presence of
cultures, customs & traditions and
religion.
➤ Stability of security
➤ Peace and order
➤ Internal and external security
When should Risk
Management be performed?
• Program planning
• During solicitation
• During performance
• After performance
• A continuous process
risks evolve in
➤ Communication is key!
Thank
You