Risk Management as an

enabler for project success

Edwina Hayward
BMT Hi-Q Sigma Ltd

1
Presentation Agenda

 The Risk Management Process

 The Benefits

 Summary

2
Risk Management Definition

 What is Risk Management

– Risk Management is a process that allows individual risk events and
over all risk to be understood and managed proactively, optimising
success by minimizing threats and maximising opportunities
APM BoK

 What is a risk?
– An uncertain event or condition that, if it occurs, has a positive
(opportunity) or negative (threat) effect on a project objective.

3
What is needed to deliver the benefits
 Decide the approach
 Integrating the process into the project environment
– Including within the controls framework
 Selecting the right tools and techniques
 Considering roles & responsibilities
 Embed in to the culture
 Monitor progress and forecast the future
 Inform and assist decision making
 Monitor effectiveness of the risk process
What is required?
Before starting ANY risk management activity you need to have a clear
understanding of the following:

• What is the aim of the project?

• It’s objectives

• What Assumptions have been made about the project?

• What dependencies does the project have?

• What is the deterministic schedule?

It is a cyclical process as risks and assumptions become better understood

they are used to inform the deterministic baseline

5
Risk Management Process
Project
Identify
When you have a clear understanding of the certainties and uncertainties of
your project ask yourself:

1. What might cause a delay?

2. What might cost more?

3. What could cause performance to be compromised?

7
Is my risk really a risk?
It’s easy to lose genuine risks in amongst these:

 Descriptions of estimating uncertainty – “this activity may take longer

than planned, we just aren’t sure”

 Events which are already issues – “this has happened or will definitely
happen, we need to manage the impact”

 Activities which should be normal business – “there is a risk that we

don’t undertake an activity adequately”
 Is my risk really a risk?
It’s also easy to get the components of a risk in the wrong boxes –

“there is a risk that Contract Placement will be delayed”

this is the impact, what are the underlying circumstances and risk events
which lead to this?
Getting the components right These circumstances do Wider
Organisation
not directly cause risks Risk events
Objectives
but they increase the have impacts,
Projects are exposed to
likelihood that a risk these must be Project
risks because of the Objectives
event will occur identified at the
circumstances within
first point of Time
which they are operating
impact Time

Time

Cause (Underlying Circumstances) RISK Immediate Impact

EVENT
Time

•Knowns – things which Specific event with a •Activity delayed •Next key
have happened, are probability of milestone
•Cost item increased
happening or will happen occurrence, which •Base cost
(the plan) exists because of the •KUR compromised
underlying •Agreed
•Assumptions – things which requirements
circumstances
are assumed and subject to
change
•Unknowns – things which
may happen

DEVELOP RESPONSES TO ALL THREE COMPONENTS

•Change facts Reduce likelihood of •Minimise delay

•Reduce / remove event occurring •Minimise cost increase
uncertainty around •Minimise performance
Unknowns
degradation

10
Describing a Risk

Cause (Underlying Circumstances) RISK Immediate Impacts

EVENT
Time

IT IS KNOWN THAT (KNOWNS): THE RISK TO PERFORMANCE: identify the THE OBJECTIVE IS TO:
Statements of fact BECOMES AN specific performance P: Performance requirement
WILL (NOT) ISSUE WHEN (RISK requirement which is
C: Cost limit / target
EVENT): compromised or not met
IS (NOT) T: Time limit / target
HAS (NOT)
Description of TO ACTIVITY: identify the
HAVE (NOT)
specific event using specific schedule activity which
DID (NOT) present tense verbs will take longer
ARE (NOT) Change
Receive TO COST: identify the specific
IT IS ASSUMED THAT: Display cost item which will cost more
Statement of assumed fact Find
Leave
A RISK EXISTS BECAUSE Stop
(UNKNOWNS): Break
Statements of uncertainty Discover…..
MAY (NOT)
MIGHT (NOT)
CAN (NOT)

11
Assessing a Risk
 Getting the best information
– Getting the right stakeholders involved

– Use historical Information

– Re-assess regularly based on latest
understanding

12
Plan and Implement Responses
 Ensure that responses are identified,
captured and resources

 Regular review to update on progress and

feedback to re-assessment of the risk

 Decisions can be made on effectiveness of

responses
13
Undertake Analysis
 Undertaking Cost and Schedule Analysis
– Helps to identify the likely outcome to the
objectives
 Informs Decision Making

 Manages expectations

14
Manage and monitor progress
 Aim to answer key questions:
– Are the responses being implemented?
– Are they being effective?
– Is the level of risk as expected?
 Control mechanisms:
– Risk documentation and training
– Risk reviews held regularly, with the correct stakeholders and
integrated with project reviews
– Responses are scheduled and are being executed
– Consumption of risk reserve
Reporting and communicating progress
 Why are we communicating?
– Need the right information to the right people at the right time to make
the right decision.
– Pitch at the right level
– Use language everyone will be familiar with.
 What are we Reporting?
– Need to ensure the key messages come across
– Need to understand what the priorities are
– What is urgent and what is important
Inform and influence decision making
 Consistent and coherent
– Risk register as a single consistent source of truth
– Coherent with other management reports and performance indicators
 Such as Earned Value
 Performance Reports
 Future forecasting
– Be careful of using the past when predicting the future
 Optimism bias
 Hindsight
 Record decisions
– In the register
– Communicate feedback
Questions?

28