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Questions and Answers
What are the key dimensions of risk in project management?
What are the key dimensions of risk in project management?
Which of the following best describes the purpose of Project Risk Management?
Which of the following best describes the purpose of Project Risk Management?
What defines a threat in the context of risk management?
What defines a threat in the context of risk management?
What distinguishes 'macro-risk' from 'micro-risk'?
What distinguishes 'macro-risk' from 'micro-risk'?
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Why is it important to understand the context of risk?
Why is it important to understand the context of risk?
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What is an individual risk in project management?
What is an individual risk in project management?
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What happens to the components of risk over time?
What happens to the components of risk over time?
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Which statement is true regarding the nature of risk?
Which statement is true regarding the nature of risk?
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What primarily influences the risk attitude of project stakeholders?
What primarily influences the risk attitude of project stakeholders?
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Which statement best describes the nature of project risk management?
Which statement best describes the nature of project risk management?
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What role does communication play in project risk management?
What role does communication play in project risk management?
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Who should be involved in project risk management?
Who should be involved in project risk management?
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Which of the following is not a responsibility of the project manager regarding risk management?
Which of the following is not a responsibility of the project manager regarding risk management?
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What is a common misconception about project risk management?
What is a common misconception about project risk management?
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What is one factor that may affect a stakeholder's sensitivity to project risks?
What is one factor that may affect a stakeholder's sensitivity to project risks?
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Which aspect of project risk management emphasizes the need for ongoing evaluation?
Which aspect of project risk management emphasizes the need for ongoing evaluation?
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What is the first step in the Project Risk Management process?
What is the first step in the Project Risk Management process?
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In which phase of the project should risk identification primarily occur?
In which phase of the project should risk identification primarily occur?
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Which technique is NOT mentioned as a method for performing qualitative risk analysis?
Which technique is NOT mentioned as a method for performing qualitative risk analysis?
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What does the formula EMV = P X I represent in quantitative risk analysis?
What does the formula EMV = P X I represent in quantitative risk analysis?
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What is the purpose of the Plan Risk Management step?
What is the purpose of the Plan Risk Management step?
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Which of the following best describes the goal of performing qualitative risk analysis?
Which of the following best describes the goal of performing qualitative risk analysis?
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What is NOT typically included in a risk management plan?
What is NOT typically included in a risk management plan?
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What is the primary focus of the monitor and control risks process?
What is the primary focus of the monitor and control risks process?
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Study Notes
Project Risk Management
- Risk is defined as the chance of harm occurring due to a hazard
- A hazard is anything that can cause harm (e.g., chemicals, electricity, tools)
- Project risk is an uncertain event or condition that could affect a project's objectives, positively or negatively
- Risks are unavoidable, with some level of uncertainty in every project outcome
- Project risks are significant, particularly in technological and social projects, and their numbers and severity typically increase
- Risk is contextual, arising in the context of a person, organization, situation, objective, task, or commitment
- Risk is dynamic, meaning the probability and impact elements of risk can change over time
- Objectives of risk management are to increase the probability and impact of positive events and decrease the probability and impact of negative events in a project
- Risk is the product of the expected consequences of an event and the probability of that event occurring
- The characteristics of risks are dynamic, some risks occur, others don't, new risks arise and those already identified may change during project lifecycle
- Project Risk Management includes planning, identification, analysis, response planning, and monitoring and control for a project
- Project Risk Management cannot be done in isolation from stakeholders and depends on communication to ensure nothing significant is overlooked and risks are assessed realistically; stakeholders' sensitivity, the scope of the project, and public commitments impacting the project are important factors
Critical Success factors
- Integrating with project management
- Recognizing the value of risk management
- Scaling risk effort to the project
- Establishing organizational commitment
- Achieving individual commitment and responsibility
- Maintaining open and honest communication
Individual Risks
- Individual risks are specific events or conditions that could affect project objectives
- An individual risk may affect project objectives, elements, or tasks, either positively or negatively
Overall Project Risk
- Overall project risk represents the effect of uncertainty on the entire project
- It represents stakeholders' exposure to variations in project outcome
Stakeholder Risk Attitude
- Stakeholder risk attitudes determine the extent to which individual or overall project risks matter
- A wide range of factors influence risk attitude, including the project's scale, stakeholder activities, public commitments regarding the project's performance, and the sensitivity of stakeholders to issues such as environmental impact and industrial relations
Risk Management as an Iterative Process
- Risk Management is an iterative process because the nature of projects means circumstances change as they are planned and executed
- The amount of information about risks will increase as the project progresses
- Some risks will occur, while others may not; new risks might arise or be discovered, and characteristics of risks that have been identified might change
- Risk management processes need to be repeated and the corresponding plans progressively elaborated throughout the project's lifetime due to the dynamism of risk
Risk Management & Communication
- Project risk management cannot occur in isolation and heavily relies on communication
- Risk identification and analysis depend on comprehensive input from stakeholders to ensure risks aren't overlooked
Risk Management & Responsibility
- Project risk management should not be left solely to risk specialists, because risks affect project objectives
- Anyone with an interest in achieving those objectives should play a role in Project Risk Management
Role of the Project Manager
- Encouraging senior management support for Project Risk Management activities
- Determining acceptable risk levels for the project in consultation with stakeholders
- Developing and approving the risk management plan
- Promoting the Project Risk Management process for the project
- Facilitating open and honest communication about risk within the project team and with management and other stakeholders
Risk Management Processes
- Plan Risk Management
- Identify Risks
- Perform Qualitative Risk Analysis
- Perform Quantitative Risk Analysis
- Plan Risk Responses
- Monitor and Control Risks
Plan Risk Management
- Defines the scope and objectives of the Project Risk Management process
- Ensures the risk process is fully integrated into wider project management
Identify Risks
- A risk cannot be managed unless it is first identified
- The iterative Project Risk Management aims to identify all knowable risks to project objectives
Techniques for Identify Risks
- Brainstorming
- Delphi technique
- Interviewing
- Root cause analysis
Perform Qualitative Risk Analysis
- The process involves assessing and evaluating characteristics of individually identified project risks
- It prioritizes risks based on agreed-upon characteristics
Perform Quantitative Risk Analysis
- Provides a numerical estimate of the overall effect of risk on project objectives based on current plans and information, using techniques like:
- Interviewing
- Delphi Technique
- Historical Information
- Expert judgment
- Expected Monetary Value (EMV) analysis
Plan Risk Responses
- Determines effective response actions appropriate to the priority of individual risks and the overall project risk
- Includes response strategies like avoid, mitigate, transfer
Risk Response Strategies
- Avoid: Completely eliminate the risk
- Mitigate: Reduce the probability and impact of the risk
- Transfer: Allocate the risk to another party
Monitor and Control Risks
- Effectiveness of Project Risk Management depends on how the approved plans are carried out
- These plans need to be executed correctly, reviewed, and updated regularly
- Includes strategies like:
- Workarounds
- Risk audits
- Reserve analysis
- Status meetings
- Risk reassessment
- Closing risks that are no longer applicable
End Note
- Success probability, if not almost one, is near zero
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Description
This quiz covers the essentials of project risk management, including the definitions of risk and hazards and how they affect project objectives. It also explores the dynamics of risk and the strategies for managing risks to enhance project outcomes effectively.
