PROJECT RISK MANAGEMENT

An evaluation of potential risks can show at an

early stage whether a proposal is worth pursuing
or not.
Definition of Risk:
It is the uncertainty inherent in plans and the
possibility of something happening, that can
affect the prospects of achieving business or
project goals
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Project Risk Management

Project Risk Management includes the processes
concerned with risk management planning, identification,
analysis, responses, monitoring and control on a project;
The objectives of Project Risk Management are to
increase the probability and impact of positive events
and decrease the probability and impact of adverse
factors;

Reasons for Risk:

Technical Problems.....Projects of Technical
Nature
Law and order situation
Lack of Support from donors.
Financial Problems;
Change in objectives of the project

etc etc
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 For the success of a project it is necessary that

any potential risk that is threatening or likely to
affect a project must be managed in a way that
may become least harmful to the project.
For this purpose Risk management provides a
tool to manage risks.

RISK MANAGEMENT
It is a tool which is directed to minimize
risk or uncertainty and improve the
probability of success by identifying,
analyzing, quantifying, and mitigating the
risks.

Stages in Risk Management

1. Risk Identification
2. Risk Management Planning;
3. Risk Quantification
4.Risk Mitigation

Risk Management Planning

Risk Management Planning is the process of deciding
how to approach and conduct the risk management
activities for a project.
The risk management plan describes how risk
management will be structured and performed on the
project.
The Risk Management Planning process should be
completed early during project planning;

Risk Management Plan

Planning meetings of the project team and stakeholders
should be held to develop the risk management plan.
The risk management plan describes how risk
management will be structured and performed on the
project. It includes the following:
Methodology: Defines the approaches & tools that may be used
to perform risk management
Roles and
Responsibilities: Defines lead and support roles for each activity
and assign team member to these roles.

Risk Management Plan

Budgeting; Assigns resources needed for the in the
project cost baseline for risk management
Timing;

Defines when and how often the risk

management process will be performed
throughout the project life cycle.

Risk Categories.
A Risk Breakdown Structure (RBS) listing the various
aspects of the project;
Technical, Organizational, External etc.
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1. Risk Identification
What are the key factors for Project Risks.
How these factors emerge
What would make it to go wrong
For Example:
Unexpected changes from stakeholders
Technological problems
Staffing changes
Financial problems
Law & Order Situation
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2. Risk Quantification
Assessment of..
A. How likely the event is to occur with
how much magnitude
Improbable

Highly Likely

B. Extent of the effect of the event

Critical: Total Failure
Major: Increase costs or hold up the
activities
Minor: Cause inconvenience but not set
the project back.
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2. Risk Quantification
Assessment of..

How much the events or problems might

be hidden that may affect the project.
Problems or events emerge because their
progress were not visible.
How easy it would be to conceal the fact that
things were going wrong with part of the project.

For Example:
Interaction between the team members
Communication gap
Politics among the project members
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2.

Risk Quantification
Risk Quantification Techniques:
i.

Decision trees-expected benefits of alternative decisions

ii. Failure Mode Effect Analysis- Potential failure and its

effect on outcomes as a total risk
Total risk= Likelihood x Severity x Difficulty in detection
iv. Cause and effect diagrams

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3. RISK MITIGATION
Employment of the procedures required to
ensure that.
The likelihood of occurring the event is reduced

OR

The effects are managed or mitigated (reduced) in

someway.

For Example:
The risk of a critical activity running late can be
reduced by making sure that the necessary
resources required are made available.

CONTINGENCY PLANNING
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