Develop Risk Strategies in Project Management

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Questions and Answers

What is the primary focus of Risk Planning in a project?

Systematic preparation and planning to minimize adverse effects (correct)

Monitoring and controlling risks

Identifying potential risks

Mitigating risks through strategies

What is the purpose of aligning Risk Management throughout the organization?

To create a unified approach to risk management (correct)

To ensure all stakeholders are aware of the risks

To minimize the impact of risks on the project

To increase the chances of successful risk mitigation

Which of the following is NOT a Risk Identification Tool or Technique?

Delphi Technique

SWOT Analysis

Project Scheduling (correct)

Nominal Group Technique

What is the primary purpose of the Nominal Group Technique in Risk Identification?

To generate a large number of ideas Signup and view all the answers

What is the next step in the Risk Management process after Risk Planning?

Risk Identification Signup and view all the answers

Which of the following Risk Identification Tools or Techniques is used to analyze the cause and effect of a problem?

Cause and Effect (a.k.a. Fishbone/Ishikawa) Signup and view all the answers

What is the primary goal of Risk Mitigation Strategies?

To minimize or eliminate risks Signup and view all the answers

What is the purpose of Qualitative Analysis in Risk Management?

To evaluate the likelihood and impact of risks Signup and view all the answers

What is the purpose of STEP 4 in risk management?

To develop risk strategies to respond to opportunities Signup and view all the answers

Which of the following is a risk mitigation strategy?

Avoidance Signup and view all the answers

What is the purpose of a Risk Response Plan?

To respond and evaluate response to risks Signup and view all the answers

Which of the following is a type of risk reserve?

Management Reserves Signup and view all the answers

What is the purpose of Risk Reviews?

To monitor and control risks internally Signup and view all the answers

What is the purpose of lessons learned and best practices in risk management?

To increase our understanding of IT project risk in general Signup and view all the answers

Which of the following is a characteristic of a risk mitigation strategy?

Reduce the likelihood or impact of the risk Signup and view all the answers

What is the purpose of STEP 5 in risk management?

To respond and evaluate response to risks Signup and view all the answers

Which of the following is a risk identification tool?

SWOT Analysis Signup and view all the answers

What is the primary focus of risk assessment?

Prioritizing risks so that an effective strategy can be formulated Signup and view all the answers

Which of the following is a qualitative approach to risk analysis?

Risk Impact Table & Ranking Signup and view all the answers

What is the formula for calculating risk?

Risk = Probability * Impact Signup and view all the answers

What determines which risks require a response?

Stakeholder risk tolerances Signup and view all the answers

Which of the following is a risk identification tool that involves identifying and mapping possible causes and effects of a problem?

Cause & Effect Diagram Signup and view all the answers

What is the purpose of a risk check list?

To ensure that all necessary risks are identified Signup and view all the answers

Which of the following is a characteristic of a risk that requires a response?

High probability and high impact Signup and view all the answers

Study Notes

Risk Management Process

The risk management process consists of five steps: Create a Risk Plan, Identify Risks, Analyze Risks, Develop Risk Strategies, and Monitor and Control Risk.

Step 1 – Create a Risk Plan

Requires a firm commitment by all stakeholders to the entire Risk Management (RM) approach.
RM should align throughout the organization.
Risk Planning focuses on preparation.
Systematic preparation and planning can help minimize adverse effects on the project while taking advantage of opportunities as they arise.

Step 2 – Identify Risks

Risk Identification Tools & Techniques:
- Learning Cycles
- Brainstorming
- Nominal Group Technique
- Delphi Technique
- Interviews
- Checklists
- SWOT Analysis
- Cause & Effect (a.k.a.Fishbone/Ishikawa)
- Past Projects
Risk Identification Framework:
- Funding for the project has been secured
- Funding for the project is sufficient
- Funding for the project has been approved by senior management
- The project team has the requisite skills to complete the project
- The project has adequate manpower to complete the project
- The project charter and project plan have been approved by senior management or the project sponsor
- The project’s goal is realistic and achievable
- The project’s schedule is realistic and achievable
- The project’s scope has been clearly defined
- Processes for scope changes have been clearly defined

Step 2 – Identify Risks through Nominal Group Technique

1.Each individual silently writes their ideas on a piece of paper
2.Each idea is then written on a board or flip chart one at a time in a round-robin fashion until each individual has listed all of his or her ideas
3.The group then discusses and clarifies each of the ideas
4.Each individual then silently ranks and prioritizes the ideas
5.The group then discusses the rankings and priorities
6.Each individual ranks and prioritizes the ideas again
7.The rankings and prioritizations are then summarized for the group

Step 3 – Analyze Risks

Risk assessment focuses on prioritizing risks so that an effective strategy can be formulated for those risks that require a response.
Risk = f(Probability * Impact)
Qualitative Approaches:
- Expected Value & Payoff Tables
- Decision Trees
- Risk Impact Table & Ranking
- Tusler’s Risk Classification
Which risks require a response?

Step 4 – Develop Risk Strategies

Strategies to respond to opportunities with potential positive impacts on the project goal and objectives:
- Exploitation – attempt to take advantage of the situation
- Sharing of Ownership – e.g.joint partnerships or joint ventures with customers or vendors
- Acceptance – PM and project team members’ minds are open in order to take advantage of opportunities as they arise
- Accept or Ignore
- Management Reserves – Released by senior management
- Contingency Reserves – Part of project’s budget
- Contingency Plans
- Avoidance
- Mitigate – Reduce the likelihood or impact (or both)
- Transfer – e.g.insurance

Step 5 – Monitor and Control Risk

Risk Audits – External to project team
Risk Reviews – Internal
Risk Status Meetings & Reports
Risk Response Plan:
- A trigger which flags that the risk has occurred
- An owner of the risk (i.e., the person or group responsible for monitoring the risk and ensuring that the appropriate risk response is carried out)
- A response based on one of the four basic risk strategies
- Adequate resources
Risk Evaluation:
- Lessons learned and best practices help us to:
  - Increase our understanding of IT project risk in general.
  - Understand what information was available to managing risks and for making risk-related decisions.
  - Understand how and why a particular decision was made.

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Description

Learn about strategies to respond to opportunities with positive impacts on project goals and objectives, including exploitation, sharing of ownership, and acceptance.