Risk Management

Risk Management

The only thing certain in todays world is:

UNCERTAINTY!!!

Risk Management

There are numerous risks involved in every project. A project manager needs to: Identify Assess and Mitigate these risks

Risk Management

What is a risk? Is a function of the uniqueness of a project and the experience of the project team. The notion of a risk involves: 1. The likelihood that some problematic event will occur 2. The impact of the event if it occurs Thus Risk = f (likelihood, impact)

Risk Management

Since risk involves likelihood AND impact, a project is considered risky even if one of the parameters is large. Risk cannot be eliminated but can be reduced. This is the purpose of Risk Management. It involves Identification, Assessment and Mitigation of risks. Nowadays there are various software available which assist in risk management.

Risk Management - Identification

Risk Identification The first step towards managing a risk is to be able to identify it and to predict its consequence. If a risk and its consequence is significant, ways must be found to avoid it or reduce the risk to an acceptable level (risk tolerance).

Risk Management - Identification

Risks tend to diminish as project progresses. High risks stem from: Using an unusual approach Using newer technology Use of new systems, equipment and procedures

Risk Management - Identification

Risks can be Internal or external. Internal Risks: Market Risk (examples) Technical Risk (examples) External Risks: Risks that stem from outside the project.

Risk Management - Identification

Most common method to identify project risks is according to project chronology.

Identification of risks according to phases of projects such a project feasibility, contract negotiation, system definition, design & development, implementation, etc.
Each phase presents unique hurdles and problems that can jeopardize the project.

Risk Management - Identification

Other techniques to identify risks: Analogy technique Checklists based on previous projects Flowcharts Brainstorming

Risk Management - Assessment

Risks are common and only the notable ones require attention. To be able to quantify a risk, we need: Risk likelihood Risk impact

Risk Management - Assessment

Risk likelihood: What are the chances of a particular risk occurring? Risk Impact: What is the impact likely to be if the risk occurs?

Risk Management - Assessment

Risk Consequence = (Likelihood) x (Impact)

Risk Management - Mitigation

There are 4 responses to a risk: 1. Avoid it 2. Transfer it 3. Mitigate it (Contingency Planning) 4. Accept it

Risk Management

General principles of risk mgmt: 1. Create a risk mgmt plan 2. Have a risk profile for each risk 3. Appoint a risk officer for project 4. Have a buffer in your project for unanticipated risks 5. Continuous monitoring 6. Establish clear communication channels 7. Procedures and documentation are critical

Risk Management

Risk Management is not a complex task. If you follow the steps, you can put together a risk management plan for your project in a short space of time. Without the plan, the success of your project, and your reputation as a project manager is on the line.

Risk Management case study

City Bank (USA), a $10 billion bank intends to outsource part of its IT operations to Vipro Ltd. As a result, a major chunk of its IT operations will now be offshored to Vipros Bangalore office. If you are the CTO of City Bank, what are the risks you have to address?

Risk Management case study

1. Layoffs resentment amongst current employees 2. Lack of business knowledge 3. Data security in offshore (ID theft) 4. Communications vulnerability 5. Loss of control 6. Personnel security at offshore 7. Intellectual property issues (Code theft) 8. Legal Issues 9. Hostile geographies

Syllabus
Project Management
What we will cover this semester: 1. Project Life Cycle (PLC) 2. Organizing for projects 3. Planning & Scheduling 4. PERT / CPM and GANTT Charts 5. Cost and Budgeting 6. Risk Management 7. Project MIS 8. Project End Activities