Risk Response Planning: Strategies for Managing Project Risks, Slides of Risk Analysis

Download Risk Response Planning: Strategies for Managing Project Risks and more Slides Risk Analysis in PDF only on Docsity! Risk Re sponse Planning Objective Develop options and determine actions to enhance opportunities and minimize threats to project objectives. Assign responsibility to individuals or parties for each risk response. Inputs to Risk Response Planning 1. Risk management plan. Major elements from the plan needed include roles & responsibilities, budgets and schedule for risk management activities, risk categories, definitions of probability & impact, and the stakeholders’ tolerances. 2. Risk Register Reference will be made to: 1. List of prioritized risks. from qualitative and quantitative risk analysis. 2. Probabilistic analysis of the project. from quantitative risk analysis. 3. Probability of achieving the cost and time objectives. 4. List of potential responses. In the risk identification process, actions may be identified that respond to individual risks or categories of risks. Inputs to Risk Response Planning 5. Risk thresholds. The level of risk that is acceptable to the organization will influence risk response planning. 6. Risk owners. A list of project stakeholders able to act as owners of risk responses. Risk owners should be involved in developing the risk responses. 7. Common risk causes. Several risks may be driven by a common cause. This situation may reveal opportunities to mitigate two or more project risks with one generic response. 8. Trends in qualitative and quantitative risk analysis results. Trends in results can make risk response or further analysis more or less urgent and important. 9. Watch list of low priority risks. Tools & Techniques for Response Planning 1. Strategies for negative risks (Threats) 2. Strategies for positive risks (Opportunities) Examples of Risk Avoidance Add resources or time. Adopt a familiar approach instead of an innovative one. Avoid an unfamiliar subcontractor. Clarify requirements. Improve communication Obtain information Acquire expertise. Reduce scope to avoid high-risk activities Risk Transfer Transfer the risk to a third party who will carry the risk impact and ownership of the response. Risk Transfer is most effective in dealing with financial risk exposure. Risk transfer nearly always involves payment of a risk premium to the party acquiring the risk. Examples of risk transfer are: The use of insurance, performance bonds, warranties and guarantees. Contracts may be used to transfer liability for specified risks to another party. Use of a fixed price contract may transfer risk to the seller if the project’s design is stable. A cost reimbursable contract leaves more of the risk with the buyer, but it may help reduce cost if there are mid- project changes. Risk Mitigation Risk mitigation aims at reducing the probability and/or impact of a risk to within an acceptable threshold. The probability/Impact should be mitigated before the risk takes place. Thus avoiding to deal with the consequences after the risk had occurred. Mitigation costs should be appropriate given the likely impact and probability of the risk. Risk Acceptance A contingency plan is developed in advance to respond to risks that arise during the project. Planning would reduce the cost of an action should the risk occur. Risk triggers, such as missing intermediate milestones, should be defined and tracked. The most usual risk acceptance response is to establish a contingency allowance, or reserve, including amounts of time, money or resources to account for known risks. The allowance should be determined by the impacts, computed at an acceptable level of risk exposure, for the risks that have been accepted. 2. Strategies for positive risks (Opportunities) Strategies for positive risks are: 1. Exploit 2. Share 3. enhance Exploit the opportunity Ensure that the risk event happens by eliminating the uncertainty. to take advantage of the opportunity. Examples: assign qualified personnel, select an appropriate project delivery, provide better quality. Accept the nsk m See shde on Risk Acceptance Outputs from Risk Response Planning 1. Risk Register Updates The risk register is updated to reflect the results of the response planning process. Level of detail of documenting a risk should be appropriate to the ranking of the risk (high risks in detail, low risks by listing) Risk Register Content Items in the risk register Identified risks, their description, the area of the project (e.g. WBS element) affected, their causes and how they may affect project objectives. Risk owners and assigned responsibilities. Results from the qualitative and quantitative risk analysis processes. Agreed response strategies Specific actions to implement the response plan. Budget and schedule activities for responses. Symptoms and warning signs for risks’ occurrence Contingency plans with triggers Contingency reserves. Fallback plan for when risk occurs and original response is inadequate Residual risks expected to be remaining after the strategy is implemented and accepted risks Secondary risks arising directly from implementing a risk response