Question

Project risk can be simply defined as any possible event that can negatively affect the viability of a project and can be computed using the simple relation:

Project Risk = Probability of event * Consequences of event

Let’s investigate the quantitative risk identified for a company, last year.

Probability of Failure Category	Probability of Failure	Consequences of Failure Category
Process Maturity	30%	Performance = 55%
Technical Complexity	25%	Schedule = 75%
Vendor Dependency	30%	Cost = $55
Workforce Availability	10%	Reliability = 20%

Use the table above to answer the following questions:

1. Please calculate the total risk factor for this project. Would you assess this level of risk as low, moderate, or high? Why?

(Hint: Total Risk Factor = (Pf + Cf) - (Pf*Cf) Where P = Average probability of failure and C = Average Consequences of Failure. A common rule of thumb assigns any project with a Risk Factor of below 0.30 as low risk, with a Risk Factor of between 0.30 and 0.70 as medium risk, and Risk Factor over 0.7 as high risk).

2. What are all the risk mitigation strategies available to this company (in the example above)? What specific mitigation options would you recommend to the corporation?
3. To reduce the total risk factor by one level (i.e., High to Medium or Medium to Low) what would be your focus among the four probabilities of failure and four consequences of failure listed?

• If you were to prioritize your efforts, which risk factors would you address first? Why?

5. Explain the meaning of the following sentence: Reduction of risk factors is not cheap.

Answer 1

What are all the risk mitigation strategies available to this company (in the example above)? What specific mitigation options would you recommend to the corporation?

Probability of Failure Category	Probability of Failure	Consequences of Failure Category	Project Risk = Probability of Failure* Consequences of Failure Category	Risk Mitigation
Process Maturity	30%	Performance = 55%	=30%*55%=16.5%	Process Maturity could be greatest challenge for any organization, here, Process should be identified and studied well, team members must gain their knowledge on the process, next thing is the process must be reviewed through simulation, prototyping and user case development, here, we must find the issues applicable with the processes and fix such issues by finding root causes of such problem. We must develop standard operating procedures and method sheet that can be followed by operators,
Technical Complexity	25%	Schedule = 75%	=25%*75%=18.75%	The technical complexity can be happened due to lack of expertise and it requires strengthening focus on research and development activities, here, we must be having technical expert to solve such queries,
Vendor Dependency	30%	Cost = $55	=30%*55=16.5	Vendor dependency require improvement in supply chain map and activities, here, supply chain should build sustainable and long term relationship with the vendors, further, such dependency should be reviewed over time to meet the goals of organization.
Workforce Availability	10%	Reliability = 20%	=10%*20%=2%	Workforce availability can be depending on availability of skills and expertise in the vicinity, further, organization can improve their training program and evaluation strategy to mitigate such problem.

Here, we should definitely give strong focus on all the factors as each factor has different or distinct side effects on the health of Organization, further, Technical complexity could be considered as one of the essential focus, here, organization should improve over their functional issues.

Reduction of risk meaning taking careful steps to reduce the probability of a loss, or to reduce the seriousness of a conceivable loss. Risk is about vulnerability. On the off chance that you put a system around that vulnerability, at that point, you viably de-risk your venture. What's more, that implies you can move substantially more unhesitatingly to accomplish your task objectives. By recognizing and dealing with an extensive rundown of venture risks, horrendous shocks and boundaries can be reduced and brilliant open doors found.

It comes with a cost.

• Risk management preparation should be an ongoing endeavor which can not stop following a specific risk assessment or the establishment of future rates.
• Risk management includes forecasting how major risks are relieved and monitored once recognized.
• A person or an organization must assess and recognize their liabilities to participate in risk management. This monetary risk assessment is one of the most important and problematic parts of a risk management plan. In any event , it is important for someone's gain to be successful in ensuring that you recognize the full extent of the risks.
• In high-level, low-like conditions, the impact or likelihood or both must be alleviated. Risk moderation and management are certainly not cost-free.
• Risk controls that tend to implement detailed information or early warning mechanisms which offer data to investigate the impact, probability or time of risk even more precisely. If risk notice can be obtained early enough to make a move against it, data collection may be preferable over slowly unmistakable and probably increasingly costly activities at that point.It's not even fair, nevertheless. If a corporation is bound to build something else and if competition poses a risk, one agreement at this point might be to enhance the venture to lower risk to the market even at some impressive costs by tackling the challenge of publicity.