Understanding Risk Management

filling out the Fishbone Diagram

1. Define the problem, to work backwards from. 2. Identify the categories-what are the categories that could be creating the problem, example, road construction. 3. Brainstorm the causes-areas of concern Note: Brainstorming should be a judgment-free zone. Encourage the flow of information related to the categories and try not to rule things out. When dealing with human factors, steer clear of naming individuals; instead, focus solely on behaviors. 4. Analyze the causes

who needs to communicate

A communication plan documents the process, types, and expectations of project communication. It also answers questions about who, what, when, why, and how communication happens and where key information communicated is stored. A communication plan organizes and documents the process, types, and expectations of communication for the project. It also tracks where the key information that is communicated is stored. The size and complexity of the plan differs for each project, but it is always good to have. A communication plan helps project managers keep aware of the numerous project communications and organize them effectively. To that end, the communication plan documents and organizes the process, types, and expectations of project communications. A communication plan helps to manage all the different kinds of communication that will happen during a project. It covers key questions about project communications, such as who communicates, what they communicate, why the communication happens, and more.

Decision Tree Approach

A decision tree is a flowchart that helps visualize the wider impact of a decision on the rest of your project. For example, you decide to hire a contractor with a reputation for missing deadlines because you know they do great work. In this case, you might create a quick flowchart that visualizes the risks and potential options for addressing it like checking in with the contractor daily, either by email or through meetings. Ultimately, you might then choose to have daily check-in meetings with the team to ensure that they're staying on top of their tasks.

cause and effect diagram

A decomposition technique that helps trace an undesirable effect back to its root cause. Fishbone diagrams help the team to brainstorm potential causes of a problem or risk and sort them into useful categories. These categories show the areas that you should focus on to mitigate that risk. Fishbone diagrams are also very helpful in finding the root cause of a problem.

dependency

A dependency is a relationship between two project tasks, where the start or completion of one depends on the start or completion of the other. In other words, dependencies are like links that connect one project task to another.

Risk Register

A document in which the results of risk analysis and risk response planning are recorded. A risk register is a table or chart that contains your list of risks.

cause and effect diagram (fishbone diagram)

A great tool that you can use during brainstorming is called a cause-and-effect diagram, also sometimes known as a fishbone diagram. Cause-and-effect diagrams show the possible causes of an event or risk and are very useful at risk management. ause-and-effect diagrams can help identify all the ways that things could go wrong by identifying a potential risk, known as the effect, and working backwards to consider the potential causes of that risk.

Finish-to-Finish (FF)

A logical relationship in which a successor activity cannot finish until a predecessor activity has finished. In this model, Task A must finish before Task B can finish. (This type of dependency is not common.)

Start-to-Finish (SF)

A logical relationship in which a successor activity cannot finish until a predecessor activity has started. In this model, Task A must begin before Task B can be completed.

Probability and Impact Matrix

A probability and impact matrix is a tool used to prioritize project risks. I personally love this technique and use it all the time in my role at Google. Earlier, I mentioned that you need to assess the likelihood that a risk will happen and its potential impact. This matrix will help you do just that. To create a probability and impact matrix, you will need to think about the level of impact. Impact refers to the damage a risk could cause if it occurs.

risk factors

A risk is a potential event that can occur and can impact your project. When you think about risk in the context of project management, you will think about them as hypothetical. In other words, these aren't events that will definitely happen, but because there's a possibility that they could happen, it's your responsibility as the project manager to identify and plan for those risks.

Risks and stakeholders

A risk management plan is a living document that contains information regarding high-level risks and the mitigation plan for each of those risks. This plan helps ensure that teammates and stakeholders have a clear understanding of potential problems and a plan to address them should they occur.

risk management plan

A risk management plan is a living document that contains information regarding high-level risks and the mitigation plan for each of those risks. This plan helps ensure that teammates and stakeholders have a clear understanding of potential problems and a plan to address them should they occur.

Risk Mitigation

A risk response strategy whereby the project team acts to reduce the probability of occurrence or impact of a risk. Risk mitigation planning is about finding ways to eliminate or reduce the impact of potential risks to your project. There are four common ways to mitigate risk. You can avoid it, accept it, reduce or control it, or transfer it.

Single Point of Failure (SPOF)

A single point of failure is a risk that has the potential to be catastrophic and halt work across a project. These are risks that have the power to stop an entire team in its tracks, meaning that no one can make progress on their tasks until the issue is resolved. Power outage. Budget for a single cloud service, outside the internal systems.

Analyze the risk

After identifying the risks, determine their likelihood and potential impact to your project. Serious risks with a high probability of occurring pose the greatest threat.

opportunity/ upside risk

An opportunity is a potential positive outcome that may bring additional value to a project. You can use the same tools and techniques that you use in risk management—identify, analyze, evaluate, treat, and control—to add potential opportunities to your risk management plan. You need to know what to do if things go wrong, but you should also make plans to seize opportunities. By using techniques such as brainstorming and drawing on project history or prior experience, you can identify potential opportunities and outline how you will take advantage of them if they occur.

four types of risk mitigation

Avoid, minimize, transfer, accept

Budget Risk

Budget risk refers to the possibility that the cost of a project will increase due to poor planning or expanding the project scope. For example, if you overspend, you might not be able to pay your suppliers. This could result in some reputational damage for the company.

Document Communications

Choose a tool or template to document all of your communication needs, and begin developing your plan.

Brainstorm and craft the appropriate message

Communicate the right message by thinking about your intended audience. What channels can your audience use to contact you or the team? Are you conveying information? Are you asking for input? Are you clarifying an issue? Are you resolving a problem? Some team members may require detailed information, while others may only need an overview of the situation. No matter your audience, you should be sure to identify the purpose of the message, state the information or request clearly and concisely, and stay on topic.

Obtain feedback and incorporate that feedback going forward

Communication doesn't end when you deliver your message, so be sure to follow up with your audience by: Checking to make sure your message was clear. Asking them for feedback. Encouraging open communication. Responding to questions quickly. In this final step, you will obtain feedback from your audience to ensure that your message was received as you intended.

communication

Communication is not a one-time event; it needs to happen throughout the entire life cycle of the project—from the project team, stakeholders, and the project manager.

Documentation Storage

Documentation storage and sharing is very important. Having plans in one place makes communication quicker, easier, and more streamlined because everyone knows where to find any information they need. Just as important is making sure your files are stored with clear labels or organized into folders.

treat the risk

During this phase, make a plan for how to treat and manage each risk. You might choose to ignore minor risks, but serious risks need detailed mitigation plans.

Monitor and control the risk

Finally, assign team members to monitor, track, and mitigate risks if the need arises.

time risks

First, we have time risks. Time risks refer to the possibility that project tasks will take longer than anticipated to complete. You'll need to be aware of time risks because time is money. Poor time management may deplete your budget and upset your stakeholders by causing delays.

low-level risks

For low-level risks, something as simple as an e-mail might suffice. For example, when sending out weekly planning updates to a project stakeholder, you might list a few low-level risks that are relevant to their interests and briefly explain how you'll address these risks if they arise.

medium level risks

For medium-level risks, you might increase your level of communication to a direct e-mail between yourself and the stakeholder in which you outline the risk with more specifics and provide a detailed explanation of your plan to mitigate the risk. You might also link to your risk management plan to provide them with more information.

Communication Plan

Identify stakeholders communication frequency Communication Goals Barriers

Impact

Impact refers to the damage a risk could cause if it occurs. The impact is also determined on a scale of high, medium, and low. High means that if the risk occurs, it will substantially alter the project. Low means if the risk occurs, it will have a slight impact but it's not likely to derail the project.

Start-to-Start (SS)

In this model, Task A can't begin until Task B begins. This means Tasks A and B start at the same time and run in parallel.

accept

Lastly, you can accept the risk as the normal cost of doing business. Active acceptance of risk usually means setting aside extra funds to pay your way out of trouble. Passive acceptance of risk is the "do nothing" approach. While passive acceptance may be reasonable for smaller risks, it is not recommended for most single point of failure risks. It is also important to be proactive and mitigate risks ahead of time whenever possible, as this may save you from having to accept risks. In the Office Green scenario, the project manager could schedule a meeting with project stakeholders to discuss the increase in South American taxes and how it could impact the project cost. Then, they might decide to actively accept the risk by setting aside additional funds to source the seeds from another supplier, if necessary, or to passively accept the risk of not receiving the seeds at all this season.

minimize risk

Mitigating a risk involves trying to minimize the catastrophic effects that it could have on the project. The key to minimizing risk starts with realizing that the risk exists. That is why you will usually hear mitigation strategies referred to as workarounds. What if the Office Green team decided to use both the original South American supplier and another supplier from a neighboring country? More than likely, the change in taxation and regulation wouldn't affect both companies, and this would provide Office Green some flexibility without having to completely eliminate their preferred supplier.

Issues

Next, let's discuss issues. An issue is a known or real problem that can affect the ability to complete a task. What's the difference between a risk and an issue? Think of it like this: a risk is an event that could potentially happen. If the event actually happens, then the risk becomes an issue. In other words, risks are the big what-ifs and issues are things that currently impact a project. It is clear that risks and issues can pose a threat to your project.

Evaluate the risk

Next, use the results of your risk analysis to determine which risks to prioritize.

communication plan

Outlines summary of communication documents, work assignments, schedules, and distribution methods. A communication plan organizes and documents the process, types, and expectations of communication for the project. The size and complexity of your communication plan will be different for every project, but it is always good to have one. Especially with multiple stakeholders, different phrases and change management are involved.

Probability

Probability is the likelihood that a risk will occur. We also determine probability on a scale of high, medium, and low. In this case, high probability means there's a high likelihood of this happening. Low probability means you've identified a risk that could happen, but it isn't likely that the risk will occur.

Knowledge Management (KM)

Process of creating, acquiring, sharing, and managing knowledge to augment individual and organizational performance. If someone needs to review this project for making decisions or planning similar projects, they should be able to easily access the information they need. It also helps set the tone for future projects and future project managers, which can be incredibly helpful if you happen to be the one jumping onto a new project. It's also important to determine what kind of information to share with whom and when. Figuring out the right information to share is even more important when you're working on projects that have sensitive data. In those cases, you need to be very careful of how you share information about your project with stakeholders who do not have permission to view sensitive data.

Scope of Risk

Scope risk refers to the possibility that a project won't produce the results outlined in the project goals. You need to be aware of scope risks because the deliverables of your project might not be acceptable to your stakeholders or customers, and that may defeat the purpose of the entire project.

risk communication

Stage in risk analysis when policy makers find ways to address the hazard and risk with the public

effective change management

The communication plan also helps with effective change management, the process of delivering your final project and getting it successfully implemented. When others have access to the communication plan after you leave the project, they'll be able to fix any problems that might come up, make decisions, or apply similar processes to a new project.

Identify the risk

The first phase of the risk management process is to identify and define potential project risks with your team. After all, you can only manage risks if you know what they are.

External risk

The possibility of loss, damage or injury outside of a business or other organization. External risks, we're referring to risks that result from factors outside of the company that you have little to no control over. For example, your project could be impacted by an environmental risk, like a major storm, or a legal risk, like a change in regulatory requirements.

Identify stakeholders

The process of identifying the people, groups, or organizations that could impact or be impacted by a decision, activity, or outcome of the project; and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success. -Have you created a RACI chart or stakeholder map of all your stakeholders? -Who is your audience? -Who will need to be informed at different points during the project life cycle?

High-level risk factors

The serious nature of high-level risks requires a thorough and direct level of communication. When you're meeting with stakeholders to go over the project plan, you might add an agenda item to present serious risks and your plans to mitigate these risks.

Transfer

The strategy of transferring shifts the responsibility of handling the risk to someone else. The Office Green team could find a supplier in North America that uses the seeds from several other South American countries and purchase the seeds from them instead. This transfers the ownership of South American regulatory risks and costs to that supplier.

Finish-to-Start (FS)

The successor activity cannot be started until the preceding activity has finished (most common relationship). In this type of relationship between two tasks, Task A must be completed before Task B can start. This is the most common dependency in project management. It follows the natural progression from one task to another.

avoid

This strategy seeks to sidestep—or avoid—the situation as a whole. In the Office Green example, the team could avoid this risk entirely by considering using another seed that is widely available in several locations.

on a need-to-know basis

When someone has a justifiable reason to know information eg information needs to be shared to keep the person/or others safe from harm. Only share information on a need-to-know basis. It's your job to present the right information at the right time to the right people.

Recognize and understand individual differences

You can encourage open, inclusive communication by: 1.Not making assumptions about your audience's backgrounds, identities, or experiences. 2. Being mindful of your own biases. 3. Using appropriate, professional, and neutral language. 4. Including, respecting, and being curious about diverse points of view.

status report

a report summarizing a group's past achievements and future goals

Fishbone diagram

a visual aid that helps organize cause and effect relationships for "things gone wrong". Fishbone diagrams—also known as Ishikawa diagrams or cause-and-effect diagrams—were developed by Japanese organizational theorist Kaoru Ishikawa in the 1960s to measure quality control processes in the shipbuilding industry. Fishbone diagrams are a visual way to look at cause and effect. They are called fishbone diagrams because they have a similar shape to a fish skeleton.

Dependency Graphs

diagrams used to portray the dependency of one element on another

Inherent Risk (IR)

inherent risk rating. Inherent risk is the measure of a risk calculated by its probability and impact. Measuring the inherent risk gives us a method for understanding risk. Inherent risk is also determined on a high, medium, and low scale. Basically, if a risk has a low impact and low probability, it has a low inherent risk rating. These are the types of risks you don't need to worry too much about.

Risk Management

is the process of identifying and evaluating potential risks and issues that could impact your project. Risk management is an ongoing practice throughout the life cycle of your project: 1. Identify the risk 2. Analyze the risk 3. Evaluate the risk 4. Treat the risk 5. Monitor and control the risk

Documentation Management

stored in one central place. This makes it easier for teams in different countries to find and share their research with each other, which optimizes workflow and reduces duplicate work. Documenting and organizing plans also provide visibility and accountability. Your project plan is a great example of this. Each task has an owner and a due date. This creates visibility for the members of the project team and accountability for the task owner. It's common for members of the team and senior stakeholders to reference your project plan and associated documents when they need a refresher on timelines or milestones.

risk assessment

the process of measuring risk. Risk assessment is the stage of risk management where qualities of a risk are estimated or measured. By qualities, we're mainly referring to how likely the risk is to occur and its potential impact on a project.

Deliver your message

think about which methods are available and appropriate for communicating with various members of your team, whether that is in person, in a video conference, over the phone, via email, or in a meeting. Choosing the right method is especially important if you have team members or stakeholders in different regions and time zones.

reduce or control risks

where you can reduce the possibility by having more vendors, or meet with vendors to see what their plans are to mitigate these situations.