Risk Management in Projects
A risk is anything that will have a negative impact on any one or all of the primary project constraints, ie Time, Scope and Cost
4 step process:
Identify Risk - Make list of potential risks continually
Analyse Risk - Prioritise according to threat/likelihood
Plan for Risk - Avoid or make contingency plans (TARA)
Monitor Risk - Assess risks continually
The analysis/assessment of risk is primarily concerned with the likelihood of them occurring and the severity of impact on the organisation or project should they occur.
Sometimes the likelihood is a subjective probability, the opinions of experienced managers or experts in the field. On other occasions, there is some statistical evidence on which to base the assessment.
Planning for risk involves TARA
Transfer the risk (to a 3rd party eg. insurance)
Avoid the risk (don’t take the project on)
Reduce the risk through controls (also called mitigation of risk)
Accept the risk (particularly if it’s an insignificant or improbable risk)
All projects incur risks which include cost over-run, missed deadlines, poor quality, disappointed customers and business disruption.
The risk of not completing the project within the deadline and/or within the time available;
The risk of not meeting the specifications and quality levels expected by the customers;
The risk of exceeding the budgeted cost of the project or of not achieving the desired value added following the completion of the project;
Such risks may be either foreseen, unforeseen or chaotic.
Foreseen risks refers to a distinct and identifiable project influence that may or may not have an impact on the project;
Unforeseen Uncertainty: Cannot be identified during project planning;
Chaos: whereas projects subject to unforeseen uncertainty start out with reasonably stable assumptions and goals, projects subject to chaos do not. Even the basic structure of the project plan is uncertain.