Project Management Chapter 11

Secondary Risks

A direct result of implementing a risk response

Risk breakdown structure

A hierarchy of potential risk categories for a project

Risk Management Plan

A plan that documents the procedures for managing risk throughout a project

A general definition of project risk

An uncertainty that can have a negative or positive effect on meeting project objectives

Planning risk management

Deciding how to approach and plan the risk management activities for the project

Identifying risks

Determining which risks are likely to affect a project and documenting the characteristics of each

Fallback plans

Developed for risks that have a high impact on meeting project objectives and are put into effect if attempts to reduce the risk are not effective

Management reserves

Funds held for unknown risks

Triggers

Indicators or symptoms of actual risk events

Broad categories of risk

Market, financial, technology, People, Structure/process

Controlling risks

Monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project

Risk factors

Numbers that represent the overall risk of specific events based on their probability of occurring and the consequences to the project if they do occur

Performing quantitative risk analysis

Numerically estimating the effects of risk on project objectives

Planning Process

Plan risk management, Identify risks, perform qualitative risk analysis, perform quantitative risk analysis, plan risk responses

Performing qualitative risk analysis

Prioritizing risks based on their probability and impact of occurrence

Contingency reserves or allowances

Provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level

Planning Output

Risk Management plan, risk register, project document updates, project documents updates, project management plan updates, project document updates

Main strategies for negative risks

Risk avoidance, risk acceptance, risk transference, risk mitigation

Planning risk responses

Taking steps to enhance opportunities and reduce threats to meeting project objectives

Workarounds

Unplanned responses to risk events that must be done when there are not contingency plans

monitoring and controlling outputs

Work performance information, change requests, project management plan updates, project documents updates, organizational process assets updates

A decision tree is

a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain

A risk register is

a document that contains the results of various risks management processes and that is often displayed in a table or spreadsheet format, a tool for documenting potential risk events and related information

Interviewing

a fact-finding technique for collecting information in face-to-face, phone, email, or instant messaging discussions

Negative risk management is like

a form of insurance, it is an investment

The main output of the risk identification process is

a list of identified risks and other information needed to begin creating a risk register

Watch List

a list of risks that are low priority, but are still identified as potential risks

Risk Owner

a person who will own or take responsibility for each risk

Top Ten Risk Item Tracking

a qualitative risk analysis tool that helps to identify risks and maintain an awareness or risks throughout the life of a project

Brainstorming

a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgement

Sensitivity Analysis

a technique used to show the effects of ranging one or more variables on an outcome

The risk neutral approach

achieves a balance between risk and payoff

Risk register contents

an identification number of each risk event, a rank of each risk event, a description of each risk event, the category under which each risk even falls, the root cause of each risk, triggers for each risk, potential responses to each risk

Utility rises

at a decreasing rate for people who are risk averse

Risk identification tools

brainstorming, The Delphi Technique, Interviewing, SWOT analysis

Monitoring and controlling process

control risks

Performing quantitative risk analysis techniques

decision tree analysis, simulation, sensitivity analysis

Those who are risk seeking

have a higher tolerance for risk and their satisfaction increases when more payoff is at stake

SWOT analysis

helps identify the broad negative and positive risks that apply to a project

Delphi Technique provides

independent and anonymous input regarding future events

Strategic risks and upside opportunities

integrated risk management `

Controlling risks

involves executing the risk management process to respond to risk events and ensuring that risk awareness is an ongoing activity performed by the entire project team throughout the entire project

Risk management is often overlooked in projects, but

it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates

Probability/Impact Matrix or Chart

lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other

Contingency plans

predefined actions that the project team will take if an identified risk event occurs

Risk quantification tools and techniques include

probability/impact matrixes, the top ten risk item tracking, expert judgement

Runaway Projects

projects that have significant cost or schedule overruns

Risk Events

refer to specific, uncertain events that may occur to the detriment or enhancement of the project

Delphi Technique uses

repeated rounds of questioning and written responses and avoids the biasing effects possible in oral methods, such as brainstorming

Strategies for positive risks

risk exploitation, risk sharing, risk enhancement, risk acceptance

Unknown risks

risks that have not been identified and analyzed, cannot be managed

Residual risks

risks that remain after all of the response strategies have been implemented

Qualitative analysis can also identify

risks that should be evaluated on a quantitative basis

Monte Carlo Analysis

simulates a models outcome many times to provide a statistical distribution of the calculated results

Positive risks are risks

that result in good things happening, sometimes called opportunities

Risk utility or risk tolerance

the amount of satisfaction or pleasure received from a potential payoff

Project risk management

the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives

Risk appetite

the degree of uncertainty an entity is willing to take on, in anticipation of reward

Risk has

the lowest maturity rating of all knowledge areas

Dictionary definition of risk

the possibility of loss or injury

Identifying risks is

the process of understanding what potential events might hurt or enhance a particular project

Estimated monetary Value (EMV)

the product of a risk event probability and the risk events monitory value

The main output of planning risk management is

the risk management plan

The goal of project risk management is

to minimize potential negative risks while maximizing potential positive risks

Negative Risk involves

understanding potential problems that might occur in the project and how they might impede project success

The Delphi Technique

used to derive a consensus among a panel of experts who make predictions about future developments

Known risk

used to describes risks that the project team has identified and analyzed

Simulation

uses a representation or model of a system to analyze the expected behavior or performance of the system

Main outputs of risk control are

work performance information, change requests, and updates to the project management plan, other project documents, and organizational process assets