Question

Make a Project of Management Risk Assessment:

1. Make a Qualitative Risk assessment

2. Make Quantitative Risk Assessment and Mitigation

Answer 1

Qualitative risk analysis is a project management technique concerned with discovering the probability of a risk event occurring and the impact the risk will have if it does occur. All risks have both probability and impact. Probability is the likelihood that a risk event will occur and impact is the significance of the consequences of the risk event. Impact typically affects the following project elements: schedule, budget, resources, Deliverables, cost, quality, scope, performance.

	LEVEL	SCORE	FOR THREATS
HIGH	VERY HIGH HIGH	5 4	RED
MEDIUM	MEDIUM	3	YELLOW
LOW	LOW VERY LOW	2 1	GREEN

QUALITATIVE TECHNIQUES

There are several techniques when performing qualitative risk analysis to determine the probability and impact of risks, including the following: Brainstorming , interviewing , Delphi technique Historical data , Strength , weekness, opportunity. And threats analysis (Swot analysis) Risk rating scales

Quantitative risk analysis

A numerical analysis of the probability and impact of the highest risk on the project to :

Determine which risk events warrants a response

Determine overall project risk

Determine the quantified probability of meeting projects objectives

Determine cost and schedule reserves

Identify risks requiring the most attention

Create realistic and achievable cost, schedule or scope targets

		Impact
		Very low 1	Low 2	Medium 4	High 8	Very high 16
	Very high 16	5	10	20	40	80
Probability	High 8	4	8	16	32	64
	Medium 4	3	6	12	24	48
	Low 2	2	4	8	16	32
	Very low 1	1	2	4	8	16

Risk Mitigation

INTRODUCTION

The ultimate purpose of risk identification and analysis is to prepare for risk mitigation. Mitigation includes reduction of the likelihood that a risk event will occur and/or reduction of the effect of a risk event if it does occur. This chapter discusses the importance of risk mitigation planning and describes approaches to reducing or mitigating project risks.

RISK MITIGATION PLANNING

Risk management planning needs to be an ongoing effort that cannot stop after a qualitative risk assessment, or a Monte Carlo simulation, or the setting of contingency levels. Risk management includes front-end planning of how major risks will be mitigated and managed once identified. Therefore, risk mitigation strategies and specific action plans should be incorporated in the project execution plan, or risk analyses are just so much wallpaper. Risk mitigation plans should

• Characterize the root causes of risks that have been identified and quantified in earlier phases of the risk management process.
• Evaluate risk interactions and common causes.
• Identify alternative mitigation strategies, methods, and tools for each major risk.
• Assess and prioritize mitigation alternatives.
• Select and commit the resources required for specific risk mitigation alternatives.

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• Communicate planning results to all project participants for implementation.

Although risk mitigation plans may be developed in detail and executed by contractors, the owner’s program and project management should develop standards for a consistent risk mitigation planning process. Owners should have independent, unbiased outside expert’s review the project’s risk mitigation plans before final approval. This should be done prior to completing the project design or allocating funds for construction. Risk mitigation planning should continue beyond the end of the project by capturing data and lessons learned that can benefit future projects.

RISK RESPONSE AND MITIGATION TOOLS

Some risks, once identified, can readily be eliminated or reduced. However, most risks are much more difficult to mitigate, particularly high-impact, low-probability risks. Therefore, risk mitigation and management need to be long-term efforts by project directors throughout the project.

Risk Assumption

Risk assumption is the last resort. It means that if risks remain that cannot be avoided, transferred, insured, eliminated, controlled, or otherwise mitigated, then they must simply be accepted so that the project can proceed. Presumably, this implies that the risks associated with going ahead are less than, or more acceptable than, the risks of not going forward. If risk assumption is the appropriate approach, it needs to be clearly defined, understood, and communicated to all project participants.