- Risks are events that can potentially affect the project outcome in a bad way (e.g. delay in shipment, software not compatible with operating systems)
- Risk planning deals with how you manage these areas of uncertainty
- Risk planning has three components:
- Risk Identification – identifying the possible risk. By asking question such as what are the areas that is unfamiliar or complex or easily influenced by external factor
- Risk Analysis – determine impact of the risk
- Risk response – action taken in response to the risk that is the most serious
Risk management flow
Risk identification
- Risk identification tries to determine what are the problems that can happen
- Risk can come from areas such as
- Schedule - Delay in the hardware delivery causing delay in project completion
- Resource - A important team member leaving the team causing manpower shortage
- Skill - Team member not familiar with the technology
to be used (e.g. .net)
Risk analysis
- There are a lot of risks in a project, but we need to narrow down to determine what are the more critical
- Do not have resource to cater of all the risks
- For a risk to be considered critical or not, we need to quantify a risk based on
- Probability of it happening
- Impact (in terms of Potential damage to reputation, scope, time and cost)
Risk = Probability X Impact
Risk response
- Once a critical risk has been identify, there are a few ways that we can respond to
- Avoidance – find ways to prevent the risk from happening
- Mitigation – reducing the impact of the risk when it happens
- Transference – move the liability to third party such as insurance
- Acceptance – choose to accept the full consequence of the risk as it cannot be avoided (e.g. natural disasters). But have a contingency plan in place when it happens (e.g. move to another location)
Source: PMP, Prince2
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