KON7 Risk management

Project goals and risk management

What is Risk management

Not about avoiding risks, but deciding which risks are acceptable and not acceptable and need to be monitored.

What is uncertainty?

Known events that will have different outcomes if it happens

Types of risks:

• Operational, contextual, random

• Contextual, programmatic, institutional

What is operational risk about

• Will it work technically or not

• Focuses on difference and gap between what you know and what you will need to know, and how to manage the gap

What is contextual risks about

• Focuses on difference between what you know and what you will need to know, and how this will affect planning and execution

• Operate within social contexts such as current laws, legislations, morals, norms

What is institutional risks about

• Do we have resources?

• Will we be part of the decision making process?

• Will important stakeholders contribute in the right time?

Difference between operational and financial risks:

High operational risks and low financial risks in the beginning. After the intersection, it will cost you too much to make changes!

Phases of risk management process

1. Identify risk - How often will risks occur, what’s the impact outcome? Talk with stakeholders to identify.

2. Analyze risk - Is the value of the risk based on the project or the company?

3. Prioritize risk

4. Plan how to prevent risk

5. Monitor risk

PMI:s Risk Classification

• External - unpredictable: Law changes or natural disaster

• External - predictable: Financial changes, raw material access changes

• Internal - non-technical: Security, working time agreement

• Internal - technical: Design changes, technical issues

• Legal: Issues with licenses, patents, rights, lawsuits

Risk map

Categorize risks.

• Low risks don’t need action plan.

• Acceptable risks need situational plan to know what to do if it happens.

• High risk need plan to eliminate or plan to reduce impact

Examples of risk measures

• avoid

• move

• reduce risks or consequences or probability

• accept

• integrate risk planning into project planning 

• build risk analysis and risk management into all life cycle phases - good for controlling and monitoring risk. 

• take potential problems seriously

• keep your eyes open after new circumstances

• accept that you can’t identify and resolve all risks

How do we do risk response control

• Implement risk strategy

• Monitor and adjust plan for new risks

• Change management

• Document and write lessons learned after project

General project risk management principles

Effective project risk allocation and ownership

Adequate level of effort

Proactive approach

Example of risk assessment form

Example of risk matrix

Uncertainty profile and its implications

Chaos, unforeseen uncertainty, foreseen uncertainty, variation