Performing Risk Analysis

risk probability and impact assessment

- assign a combined probability-impact rating to each risk identified -prioritize all risk -team of experts and rank using ordinal or cardinal scale

beta

-all value between specified min and max values. -most likely value is at the top of curve -determine curve shape using math

project orientated risk analysis

-assess how identified risks could impact the overall success of a projcet -figure out how much the project is going to cost

event orientated risk analysis

-assess how specific risk event could impact a particular objective

tools and tech for perform quantitative risk analysis

-data gathering and representation techs -quantitative risk analysis and modeling techs -primary tech is interviewing stakeholders

risk register

-describes and identifies all risks -expanded and refined thru out planning processes -details of identified risks that require analysis

decision tree analysis using EMV

-determine best and worst case for the 1st path -determine expected market value of each possible outcome -compare the two EMVs to determine which option is best

EMV analysis

-determine the relative significance of risks = impact x probability -deals w/ uncertainty -determine which risks to prioritize, based on their most probable impacts -predict what all risks will probably cost a project, financially or in terms of schedule days

2 types of probability distributions

-discrete -continuous

probability of achieving cost and time objectives

-distributions showing what impacts risks may have on the likelihood of achieving particular project goals

quantitative risk analysis process

-evaluate risks in more detail using objective methods -rate them numerically -reduces uncertainty

risk data quality assessment

-evaluates accuracy, reliability, and integrity of the data -quality not sufficient, get better data -reviewing the accuracy and relevance of risk data

risk categorization

-grouping risks based on their source -areas or phases of project

normal

-highest point in a normal is the average value -create bell shape

result of simulation

-impact on cost or schedule objectives

continuous

-includes probabilities of a full range of possible outcomes -like in a curve -normal, uniform, beta, triangular, lognormal

result charts

-indicate how much you must add to the estimated budget in order to give the project a good chance of succeeding within its expected budget

impact

-is rated according to either ordinal or cardinal like probability

factors to assess

-level of understanding -availability of data -quality of data -reliability of data

lognormal

-logarithm of a variable has a normal distribution -specific cases where factors that affect a variable have a multiplication effect on its value -ex: weight and blood pressure values

risk data gathering interview

-obtain best case estimate of what project will cost -determine best, most likely, adn worst case cost estimates -estimate of what project will most likely cost, and best case estimate, and worst case

triangular

-only plot 3 values, best case, worst, and most likely -make sure the highest point (the highest probability) isn't the same as the average value -represents an experts best guess

3 point estimation

-optimistic, most likely, pessimistic -nature of objectives and risks -how you plan adn represent and analyze data

trends in analyiss

-patterns indicating the likely occurance and impact of risks for the remainder of a project

uniform

-possible outcomes between upper and lower limits have same probability -if you know the range between which values can fall but none of these values is more probable than the other

components of risk register updates

-probabilistic analysts of the project -probability of achieving objectives -prioritized list of risks -trends in analysis results

risks

-probability -impact -risk tolerance levels

things to focus on in interview

-probability and impact of risks on projects objectives -rationale on which probability estimates are based

discrete

-probability of fixed #s of outcomes -bar charts

output of quantitative data

-project docs updates -like risk register

output of perform qualitative risk analysis

-project document updates

why is important to update the prioritized lists of risks created thru qualitative with the results of teh quantitative analysis?

-quantitative results are more objective

risk quality and urgency assessment

-rate risks based on probability and impact -group risks based on type and urgency -check accuracy -determine which require earliest responses

qualitative risk analysis

-relies on the subjective judgement of stakeholders , so its open to bias -primary objective is to prioritize risks

risk register is updated after qualitative risk analysis by

-risk are ordered by priority -near term risks are marked as urgent -risks are required further analysis are marked

tools and techs for perform qualitative risk analysis process

-risk categorization -risk data quality assessment -risk urgency assessment

inputs for quantitative analysis

-risk register -risk management plan -cost management plan -schedule management plan -organizational process assets -enterprise environmental factors

inputs to perform risk analysis

-risk register -risk management plan -scope baseline -enterprise environmental factors -organizational process assets

risks in register are categorized

-risks ordered by priority -near term risks marked as urgent -risks requiring further analysis flagged

risk management plan

-roles and responsibilities -analysis budget and schedule -risk categories -definitions of probability and impact -revised stakeholders risk tolerances -definitions of risk probability and impact

iterative models

-same "what if" scenario is played out repeatedly -each time w/ a diff possible value that may affect outcome -repeating the process gives model a characteristic of accuracy -monte carlo example

quantitative risk analysis techs

-sensitivity analysis -EMV analysis

advantages of grouping risks by category

-simplifies the planning and implementing of responses to related risks -can reveal a common root cause of related risks

noniterative model

-single set of values representing possible impacts and probabilities of each factor in an outcome is used to determine a result

decision tree analysis

-square node represents the question you want answered -chance nodes are the circles lead to the quantitative data about diff possible outcomes of each options -triangle nodes are the ends to show the results of analyzing the possibilities

schedule management plan

-techs that will be used to control activity duration and ensure that deadlines are met

sensitivity

-testing how changes in one variable affect an outcome when all other variables are same -repeat process for each variable one at time, then determine which has the greatest impact

risk urgency assessment

-timing -risk ratings -warning sign or symptoms -determines when to deal w/ risks

components that could be added to the risk register as a result of perform qualitative analysis process?

-trends for a particular risks that became apparent during the analysis -watchlist of low priority risks

questions to ask when reviewing risk related historical info

-unplanned events? -strategies? -financial impacts? -schedule impacts?

uses for the decision tree

-use it to compare costs associated w/ an opportunity -determine best strategy for managing a given risk or threat -compare the associated risks with diff choices

simulations

-used in quantitative risk assessment -represents expected behavior -imitating a real system so you can test how system is likely to react in various conditions

tornado diagram

-used to represent sensitivity -bar represents each risk and range of the impact it could have from neg and pos impact -each bar represents relative impact of each risk -bars ordered in sequence -- from greatest to least -which risks its most important to focus on managing -whether pos impacts outweigh the neg impacts

monte carlo simulations

-useful for calculating odds -cant eliminate uncertainty -can give you highly accurate indication of where probabilities lie so you can develop risk responses accordingly

cardinal scale

0.0-1.0

risk score

= probability x impact

risk categories

are developed and refined during the plan risk management and identify risk processes types: -source of risk -project areas -project phases

cost management plan

controls in place for managing the projects budget

probabilities analysis of the project

cumulative probability distributions showing how risks may affect the overall success of a project

enterprise factors

external sources of info that can help provide insight and context for the project

organizational assets

info derived from other projects about relevant risks

ordinal scale

low to high

risk management plan

method that must be used to score risks

scope baseline

nature and context of the project and its deliverables

prioritized list of quantified risks

risks ranked based on their possible impacts and statistical probabilities