RISK Knowledge Area by Process Group (PMP) Lesson 8




Inputs
Tools & Techniques
Outputs
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Plan Risk Management: The process of DEFINING HOW to conduct risk management activities for a project. In Plan Risk Management, the remaining FIVE risk management processes are PLANNED (creating a road map for them) and HOW they will be conducted is documented. Here focus will be on "HOW RISKS WILL BE APPROACHED ON THE PROJECT".
# Risk Management Plan defines WHAT LEVEL of risk will be considered tolerable for the project, HOW risk will be managed, WHO will be responsible for risk activities, the AMOUNTS OF TIME and COST tht will be allotted to risk activities, and HOW risk findings will be COMMUNICATED.
# Risk Breakdown Structure (RBS): It is not breaking down the actial risks, instead, we are breaking down the CATEGORIES of risks that we will evaluate.
PLANNING
1. Project Scope Statement
1. Planning Meetings and Analysis
1. Risk Management Plan (It includes the following:
2. Schedule Management Plan

a) Methodology, b) Roles and Responsibilities, c) Budgeting, d) Timing, e) Risk Categories, f) Definitions of risk probability and impact, g) Probability and impact matrix, h) Revised stakeholders' tolerances, i) Reporting formats, and j) Tracking).
3. Cost Management Plan

4. Communications Management Plan

5. Enterprise Environmental Factors

6. Organizational Process Assets

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Identify Risk: The process of determining WHICH risks may affect the project and documenting their characteristics.
# TT1: Documentation reviews is when you look at OPA and any documents to squeeze any possible risk out of them.
# TT2: Most common Techniques are 1. Brainstorming, 2. Delphi Technique, 3. Expert Interviews, and 4. Root Cause Identification.
# TT4: Assumptions analysis is when we look as project assumptions.
# TT5: Diagramming Techniques: Ishikawa/Cause-and-effect/Fishbone Diagram, Influence Diagram, and System or Process Flow Charts.
# TT6: SWOT: It is a tool to measure each RISK's SWOT. Each risk is plotted, and the quadrant where the Weekness (usually Internal) and Threats (usually External) are HIGHEST, and the quadrant where Strenghts (again, usually Internal) and Opportunities (usually External) are HIGHEST will present the HIGHEST RISK on the project.
PLANNING
1. Risk Management Plan
1. Assumptions Analysis
1. Risk Register
2. Scope Baseline
2. Checklist Analysis (it uses RBS)
(List of Identified Risks and List of Potential Responses)
3. Schedule Management Plan
3. SWOT Analysis
It is a part of Project Documents.
4. Cost Management Plan
4. Diagramming Techniques
Root causes, risk categories
5. Quality Management Plan
5. Information Gathering Techniques
Responses are documented here as well.
6. Activity Duration Estimates
4. Documentation Reviews

7. Activity Cost Estimates
7. Expert Judgement

8. Stakeholder Register


9. Project Documents


10. Enterprise Environmental Factors


11. Organizational Process Assets


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Perform Qualitative Risk Analysis: The process of PRIORITIZING risks for further analysis or action by assessing and combining their probability of occurance and impact.
# It is usually a RAPID and COST-EFFECTIVE means of establishing priorities for Plan Risk Responses and lays the foundation for Perform QUANTITATIVE Risk Analysis, if required. This process can lead into Perform Quantitative Risk Analysis or directly into Plan Risk Responses. # Qualitative risk analysis helps you prioritize each risk and figure out its probability and impact.
PLANNING
1. Risk Register
1. Risk Probability and Impart Assessment
1.Risk Register Updates (Updates include: 1. Relative
2. Risk Management Plan
2. Probability and Impact Matrix
ranking or priority list of project risks, 2. Risks grouped by categories, 3. Causes of risk or project areas requiring particular attention, 4. List of risks requiring response in the near-term, 5. List of risks for additional analysis and response, 6. Watchlists of low-priority risks, and 7. Trends in qualitative risk analysis results).
3. Project Scope Statement
3. Risk Data Quality Assessment
4. Organizational Process Assets
4. Risk Urgency Assessment

5. Risk Categorization

6. Expert Judgment
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Perform Quantitative Risk Analysis: The process of NUMERICALLY ANALYZING the effect of identified risks on overall project objectives. It relies on the prioritized list of risks from the Perform Qualitative Risk Analysis process. COST and SCHEDULE are easily quantified, and this process is concerned with quantifying the risks. SCOPE generally fits better into the Qualitative Risk Analysis.
# TT1: 1. Interviewing, 2. Probability Distribution (Beta Distribution, Triangular Distribution). Uniform Distribution can be used if there is no obvious value (early concept stage of design). Probability Distributions are very useful for analyzing risks.
# TT2: 1. Sensitivity Analysis (Tornado Diagram shows HOW SENSITIVE each analyzed area of the project is to risk. It ranks the bars from GREATEST to LEAST on the project so that the chart takes on a Tornado-like shape). 2. Expected Monetary Value Analysis (EMV): The EMV of OPPORTUNITIES will generally be expressed as POSITIVE VALUES, while those of THREATS will be NEGATIVE. EMV requires a Risk-Neutral assumption, neither risk averse, nor risk seeking. A common type is "Decision Tree Analysis". 3. Modeling and Simulation: Monte Carlo Analysis throws large numbers of scenarios at the schedule to see the impact of certain risk events.
PLANNING
1. Risk Register
1. Data Gathering and Representation Techniques
1. Risk Register Updates
2. Risk Management Plan
2. Quantitative Risk Analysis and Modeling Techniques
(Updates include 1. Probabilistic analysis of the project, 2. Probability of achieving cost and time objectives, 3. Prioritized list of quantified risks, and 4. Trends in quantitative risk analysis results)
3. Cost Management Plan
3. Expert Judgment
4. Schedule Management Plan

5. Organizational Process Assets

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Plan Risk Responses: The process of DEVELOPING OPTIONS and ACTIONS to enhance opportunities and to reduce threats to project objectives. It creats a plan for HOW each risk will be handled. It assigns specific tasks and responsibilites to specific team members. Here, the ACTION PLANS for HOW Risks should be handled are determined.
# TT1: Avoid - Undesirable Risks, Transfer/Deflect - to another party (Contractual Agreements and Insurance), Mitigate - to make it less, Accept (Negative/Positive) - best strategy may not be to Avoid, Transfer, Mitigate, Share, or Enhance it. Instead, the best strategy may be simply to Accept it and continue with the project. If the cost or impact of the other strategies is too greater, acceptance is the best strategy.
# TT2: Exploit - trying to remove any uncertainty, Share - improve their chances of the positive risk occurring by working with another party, Enhance - first we have to understand the underlying cause(s) of the risk. By influencing the underlying risk triggers, you can increase the likelihood of the risk occurring.
1. Risk Register Updates: Resedual Risks, Secondary Risks, Contingency Plan, Risk Response Owners, Fallback Plans, Reserves/Contingency, and Risk Triggers.
PLANNING
1. Risk Register
1. Strategies for Negative Risks or Threats
1. Risk Register Updates
2. Risk Management Plan
2. Strategies for Positive Risks or Opportunities
2. Risk-related Contract Decisions
No O.P.A & E.E.F
3. Contingent Response Strategies
3. Project Management Plan Updates
4. Expert Judgment
4. Project Document Updates
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Monitor and Control Risks: The process of IMPLEMENTING risk response plans, TRACKING identified risks, MONITORING residual risks, IDENTIFYING new risks, and EVALUATING risk process effectiveness throughout the project. #TT5: Focuses on functionality, looking at HOW the project has met its goals for delivering the scope over time.
1. Risk Register Updates: Outcomes of Risk Audits and Reassements, Identification of New Risks, Closing Risks that no longer applicable, Details what happened when Risks occurred, and Lessons Learned.
M & C
1. Risk Register
1. Risk Audits
1. Risk Register Updates 
2. Project Management Plan
2. Risk Reassessment
2. Change Requests
3. Performance Reports
3. Reserve Analysis
3. Project Management Plan Updates
4. Work Performance Information
4. Status Meetings (Team Meetings)
4. Project Document Updates
No O.P.A & E.E.F
5. Technical Performance Measurement
5. Organizational Process Assets Updates
6. Variance and Trend Analysis