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MindMap Gallery Chapter 11 Project Risk Management
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Chapter 11 Project Risk Management
PMP study notes: Chapter 11: Project Risk Management, exam points in this chapter: 1. Individual risk and overall risk «««« 2. Integrated test risk management ««« 3. Risk classification «««« 4. Risk probability and impact matrix ««« 5. Risk simulation (Monte Carlo technology)«««« 6. Decision tree «««« 7. Risk response strategies ««««« 8. Risk response tools ««««« 9. The relationship between risks and resources ««««« 10. Risk factors and project life cycle«««
Edited at 2023-06-02 17:25:28
- cáncer de pulmón
El cáncer de pulmón es un tumor maligno que se origina en la mucosa bronquial o las glándulas de los pulmones. Es uno de los tumores malignos con mayor morbilidad y mortalidad y mayor amenaza para la salud y la vida humana.
- diabetes
La diabetes es una enfermedad crónica con hiperglucemia como signo principal. Es causada principalmente por una disminución en la secreción de insulina causada por una disfunción de las células de los islotes pancreáticos, o porque el cuerpo es insensible a la acción de la insulina (es decir, resistencia a la insulina), o ambas cosas. la glucosa en la sangre es ineficaz para ser utilizada y almacenada.
- sistema digestivo
El sistema digestivo es uno de los nueve sistemas principales del cuerpo humano y es el principal responsable de la ingesta, digestión, absorción y excreción de los alimentos. Consta de dos partes principales: el tracto digestivo y las glándulas digestivas.
Chapter 11 Project Risk Management
- cáncer de pulmón
El cáncer de pulmón es un tumor maligno que se origina en la mucosa bronquial o las glándulas de los pulmones. Es uno de los tumores malignos con mayor morbilidad y mortalidad y mayor amenaza para la salud y la vida humana.
- diabetes
La diabetes es una enfermedad crónica con hiperglucemia como signo principal. Es causada principalmente por una disminución en la secreción de insulina causada por una disfunción de las células de los islotes pancreáticos, o porque el cuerpo es insensible a la acción de la insulina (es decir, resistencia a la insulina), o ambas cosas. la glucosa en la sangre es ineficaz para ser utilizada y almacenada.
- sistema digestivo
El sistema digestivo es uno de los nueve sistemas principales del cuerpo humano y es el principal responsable de la ingesta, digestión, absorción y excreción de los alimentos. Consta de dos partes principales: el tracto digestivo y las glándulas digestivas.
- Recommended to you
- Outline
Chapter 11: Project Risk Management
Project risk management process
11.1. Planning risk management
enter
1. Project charter
2. Project management plan
All components
3. Project files
Interested Party Register
4. Business environment factors
5. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Data analysis
Stakeholder analysis
3. Meeting
output
1. Risk management plan
planning process group
11.2. Identify risks
enter
1. Project management plan
demand management plan
progress management plan
cost management plan
quality management plan
resource management plan
risk management plan
Scope Baseline
progress baseline
cost basis
2. Project files
Hypothetical log
Cost Estimate
duration estimate
Problem log
Lessons Learned Register
requirements document
Resource requirements
Interested Party Register
3. Agreement
4. Procurement documents
5. Business environment factors
6. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Data collection
Brainstorming
Checklist
Interview
3. Data analysis
Root Cause Analysis
Assumptions and constraints analysis
SWOT analysis
File analysis
4. Interpersonal and team skills
guide
5. Tip list
Meeting
output
1. Risk register
2. Risk report
3. Project file update
Hypothetical log
Problem log
Lessons Learned Register
planning process group
11.3. Implement qualitative risk analysis
enter
1. Project management plan
risk management plan
2. Project files
Hypothetical log
risk register
Interested Party Register
3. Business environment factors
4. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Data collection
Interview
3. Data analysis
Risk data quality assessment
Risk probability and impact assessment
Assessment of other risk parameters
4. Interpersonal and team skills
guide
5. Risk classification
6. Data performance
Probability and Impact Matrix
hierarchical
7. Meeting
output
1. Project file update
Hypothetical log
Problem log
risk register
risk report
planning process group
11.4. Implement quantitative risk analysis
enter
1. Project management plan
risk management plan
Scope Baseline
progress baseline
cost basis
2. Project files
Hypothetical log
Estimate basis
Cost Estimate
cost forecast
duration estimate
Milestone List
Resource requirements
risk register
risk report
progress forecast
3. Business environment factors
4. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Data collection
Interview
3. Interpersonal and team skills
guide
4. How uncertainty manifests itself
5. Data analysis
simulation
sensitivity analysis
Decision tree analysis
influence diagram
output
1. Project file update
risk report
planning process group
11.5. Plan risk response
enter
1. Project management plan
resource management plan
risk management plan
cost basis
2. Project files
Lessons Learned Register
Project schedule
Project team dispatches work orders
Resource Calendar
risk register
risk report
Interested Party Register
3. Business environment factors
4. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Data collection
Interview
3. Interpersonal and team skills
guide
4. Threat response strategies
5. Opportunity response strategies
6. Emergency response strategies
7. Overall project risk response strategy
8. Data analysis
Alternatives analysis
Cost-benefit analysis
9. Decision-making
Multi-criteria decision analysis
output
1. Change request
2. Project management plan update
progress management plan
cost management plan
quality management plan
resource management plan
Procurement Management Plan
Scope Baseline
progress baseline
cost basis
2. Project file update
Hypothetical log
cost forecast
Lessons Learned Register
Project schedule
Patterned wood team dispatches work orders
risk register
risk report
planning process group
11.6. Implement risk response
enter
1. Project management plan
risk management plan
2. Project files
Lessons Learned Register
risk register
risk report
3. Tissue engineering assets
Tools & Techniques
1. Expert judgment
2. Interpersonal and team skills
Influence
3. Project management information system
output
1. Change request
2. Project file update
Problem log
Lessons Learned Register
Project team dispatches work orders
risk register
risk report
executive process group
11.7. Supervision risks
enter
1. Project management plan
risk management plan
2. Project files
Problem log
Lessons Learned Register
risk register
risk report
3. Work performance data
4. Work performance report
Tools & Techniques
1. Data analysis
Technical performance analysis
Reserve analysis
2. Audit
3. Meeting
output
1. Work performance information
2. Change request
3. Project management plan update
any component
4. Project file update
Hypothetical log
Problem log
Lessons Learned Register
risk register
risk report
5. Organizational process asset update
monitoring process group
Core Concepts of Risk Management
Uncertainty is risk
risk
Good thing - opportunity
Bad things – risks
attributes of risk
Probability
Influence
beneficial impact
Negative impact
risk exposure
Unprotected risk, also known as “exposure”
A real-time assessment of the potential impact of all risks on any given object within a project, program, or portfolio.
For example: SARS, COVID-19
Individual project risk vs overall project risk
Risk of myopia
Focus only on individual project risks and ignore overall project risks
Only focus on local risks of the project and ignore the global risks of the project
Only focus on the short-term risks of the project and ignore the long-term risks of the project
Only focus on project tactical risks and ignore project strategic risks
For example: In an Internet financial P2P project, code bugs, system security vulnerabilities, server crashes, and project team resignations are all individual project risks, while national policies restricting P2P business are overall project risks.
The story of Tian Ji’s horse racing
The story of anti-virus software, 360 Deus Ex is free forever. Technical risk is a single risk, and industry disruption is an overall risk.
variability risk
Also called black swan event
Grassroots counterattack
plot twist
Didn't follow the routine
Blinded by light
Easy to understand, different from previous new forces
Monte Carlo technology performs quantitative risk analysis to assess the probability and impact of mutation risks
Example: Trump
ambiguity risk
need? Don’t understand!
future? Can't see clearly!
law? I don’t understand!
trend? Can't guess!
Just because you don’t understand it doesn’t mean there’s no risk, and you’re not sure what will happen in the future? For example: it is impossible to predict the direction and speed of technological development, future changes in policies and regulations, and rapidly changing user needs.
Teams can adopt iterative development, incremental development and adaptive development models to improve their adaptability to such risks.
Project Resilience: When Risks Happen?
our ability to stay in shape
ability to recover quickly
The ability to adapt to better cope with future uncertainty.
Integrated risk management
Integrated project management refers to multi-level risk management in projects, programs, project portfolios and the organization where the project is located. Who is responsible for the risk?
Some risks are beyond the scope of the project manager's capabilities or affect multiple projects and should be escalated to appropriate senior management.
planning risk management
Classification of risks
According to the perception of risk
Known risks: Able to identify and analyze the probability and impact of risks in advance
unknown risk
Known-Unknown Risks
People can identify risks in advance, but they do not know the probability and impact of occurrence.
For example: You are on a business trip tomorrow to participate in bidding, and your scheduled flight may be delayed (known), but today it is impossible to determine whether it will be delayed or on time; if it is delayed, how long it will be delayed (unknown).
Resources to deal with such risks are contingency reserves
Unknown - unknown risk
Of course, people cannot know the probability of occurrence and impact of risks that cannot be identified in advance.
Funding for such risks is provided by management reserves and is not included in the cost baseline
SARS, SARS, COVID-19
according to boundaries
internal risk
Internal risks refer to our project managers and project teams who can exert some influence, and we can change or mitigate them. We still have the means to influence the risks
Classification
technology risk
The technology used is too complex
Performance goals are unrealistic
Change technology or standards during implementation
project management risk
Cost or duration estimate errors
Project plan quality is not high
Poor project communication
Improper allocation of time and resources
Improper project management principles
External risks:
We have no way to impose any intervention outside the scope of the project.
Classification
Risks within the organization (outside the project)
Resource conflicts between projects
Insufficient or interrupted project funding
Project priorities are unclear
Inconsistent understanding of project goals
Risks external to the organization
market inflation
There are changes in laws and regulations
Customer change or bankruptcy
Earthquakes, floods, plagues, etc. occur
other angles
business risk
Normal business, technology, market and other risks.
Projects may bring profits or losses
The project team should focus primarily on managing business risks
insurable risk
We can transfer the risks we originally bear by buying insurance. Buy an insurance and let the insurance company compensate you
Solution
buy insurance
signing the contract
transfer risk to others or other organizations
For example
Property losses caused by natural disasters such as fires, floods, earthquakes, and landslides.
Losses caused by work stoppages and casualties.
Risk breakdown structure (RBS)
Similar to WBS with numbers
Stakeholder attitudes towards risk
risk tolerance
Refers to the degree or amount of risk that relevant parties can bear
Considerable ability
risk appetite
Refers to the degree to which relevant parties are willing to tolerate uncertainty in order to achieve expected returns.
Belongs to subjective will
The attitude toward risk exhibited by interested parties is usually related to risk appetite and tolerance
Attitudes of interested parties
Risk thresholds are usually used to represent the attitude of relevant parties towards risks.
The risk is lower than the critical value --> Relevant parties accept the risk
The risk is higher than the critical value --> Relevant parties reject the risk
Identify risks
Tools and techniques for identifying risks
Brainstorming
Conduct discussions and discussions in the form of meetings in a normal, harmonious and unrestricted atmosphere
Group members break the rules, think positively, speak freely, and fully express their opinions at the meeting
Group members inspire each other and do not judge easily
Delphi method
This method mainly involves the investigator drawing up a questionnaire and consulting the members of the expert group through letters. The experts submit their opinions anonymously.
Experts keep each other secret and do not meet each other
Repeated consultation and feedback
root cause approach
Trace upwards until you find the cause of the risk
Fishbone diagram, also called cause and effect diagram
Determine and analyze the causes of problems, find solutions to problems, and develop preventive measures
Checklist analysis: similar to taking stock of the warehouse. Check and check all aspects
What-if analysis
Every project and its plans are based on a set of assumptions. Compare each other in pairs to select the main reason for the impact
What-if analysis steps
1. Put forward a hypothesis that may produce the results we are worried about.
2. Test the hypothesis, confirm or rule it out
3. If excluded, raise the second hypothesis; if confirmed, eliminate the specific next-level hypothesis.
4. Verify and gradually narrow the scope until you find out the real cause of the problem.
Fishbone Diagram
Also called cause and effect diagram
System or process flow diagram
expert judgment
Be aware of expert bias
Value expert intuition
Assumptions and constraints analysis
Assumptions
Uncertain, empirical inference
For example
There are feasible technical solutions
Have mature product components
There will be no other unexpected work
Customers will not change their needs
Team members can work overtime
Tighten: exposure risk
Constraints
Determined, substantial existence
For example
Relax the constraints appropriately. If 2 more people are added to the 6 people, the risk of failure to complete will be reduced.
only 6 people
Only give 500,000
Only 30 days left
Not outsourced
Data confidentiality
Relaxation: brings opportunities
If conditions tighten, risks will be exposed
Relaxing constraints creates opportunities
SWOT analysis
crosshair division
also called situation analysis
SWOT analysis is a method that can significantly and accurately analyze and study the actual situation of a project.
Belongs to external factors
Upper left corner: Advantages
Upper right corner: Disadvantages
Bottom left: opportunity
Bottom right corner: Threat
Internal factors above the horizontal line, external factors below the horizontal line The left side of the vertical line is positive, the right side of the vertical line is negative
Individual project risk and overall project risk
Individual Project Risks: Tips Checklist
The prompt list is a preset list of risk categories that may cause individual project risks and may serve as sources of overall project risks.
Use the risk categories underlying the risk breakdown structure (RBS) as a checklist to identify individual project risks
Overall Project Risk: A Strategic Framework
PESTLE
politics
economy
society
technology
law
environment
TECOP
technology
environment
Business
operations
politics
VUCA
variability
Uncertainty
Complexity
ambiguity
Hierarchy chart (bubble chart)
Help us analyze risks and the logical relationship between risks
Indicators for Bubble Chart Analysis
urgency
Proximity
incubation period
Manageability
Controllability
Detectability
connectivity
strategic influence
closeness
The horizontal axis and the vertical axis each have one dimension, and the size of the bubble represents the third dimension. For example, the horizontal axis represents urgency, and the vertical axis represents objective rationality. The size of the bubble represents proximity
Conduct qualitative risk analysis
Risk probability and impact assessment scale
Line probability and influence matrix
The impact score is a geometric sequence. The higher the risk, the smaller the impact should be subdivided.
Multiply together to find the product
Impact value = probability score * impact score
Note that if it is weighted, the weight value must be multiplied on the corresponding branch.
Risk short list
Risks with relatively high probability and impact require detailed response plans.
Risk Watch List
The risk and probability of occurrence are relatively low and need to be observed regularly for changes.
Most risks are on the watch list
Qualitative analysis is the process of risk ranking
Conduct qualitative risk analysis to assess the impact and likelihood of identified risks. In this process, risks are prioritized based on their relative probability and impact
Conduct quantitative risk analysis
Quantitative analysis is to determine how much impact a specific risk will have on our project. Quantitative analysis will only be done on particularly important risks in particularly important projects.
The main function of this process
Quantified risk information
Support decision making
Reduce project uncertainty
Monte Carlo simulation
The principle of Monte Carlo simulation is that when the problem or object itself has probabilistic characteristics, computer simulation can be used to generate sampling results, and then the values of statistics or parameters can be calculated based on sampling. As the number of simulations increases, we can obtain stable conclusions by averaging the estimates of statistics or parameters.
Sampling normal distribution
Monte Carlo Simulation Method Steps
1. Enter the minimum, most likely, and maximum estimates for the duration or cost of each activity, and select an appropriate probability distribution model.
2. The computer quickly performs random sampling based on the above input and using a given rule.
3. Perform mathematical calculations on randomly sampled data and obtain results.
4. Perform statistical processing on the resulting data to find the minimum value, maximum value, mathematical expectation value and standard deviation.
5. Let the computer automatically generate probability distribution curves and probability accumulation curves based on statistical data.
6. Conduct project risk analysis based on probability accumulation curve
sensitivity analysis
Project result indicators, such as net present value (NPV), are affected by many factors and have different sensitivities to various factors.
Also called a tornado diagram
tornado diagram
The table reflects the changes in investment amount, loan interest rate, operating costs, sales increase and net present value
For example: if the investment amount increases by 5%, the net present value NPV will be 45 million
The sensitivity of the net present value to the four influencing factors from high to low is
Lending rates
sales
Investment amount
Operating costs
decision tree
Through decision trees, we can choose the best solution among several alternatives
expected monetary value
In a decision tree, unreasonable branches represent different decisions or events, that is, alternative paths for the project.
Every decision or event has associated costs and individual project risks
The end point of a decision tree branch represents the final outcome along a specific path, which may be a negative or positive outcome
For example: build a new factory or expand the old one?
influence diagram
An acyclic directed graph composed of joints and directed arcs. The joints represent the main variables in all research problems, and the directed arcs represent various relationships between variables.
Each shape represents an influence
Acyclic directed graph consisting of joints and directed arcs
The thickness of the line represents the strength of the influence
several relationships
The arrows from opportunity nodes to opportunity nodes identify associations.
The arrow from a chance node to a deterministic node indicates a deterministic association.
The arrow from the decision node to the opportunity node represents the influence arc.
The arrow from the opportunity node to the decision node represents the information arc.
The arrow from the decision node to the deterministic node indicates deterministic influence.
The arrow from the decision node to the decision node identifies the arc.
The contacts are divided into
Opportunity contacts
decision point
Value contact
Determine the contact point
Plan risk responses
risk response methods
Original plan: refers to the identification, analysis and response plans for risks that have been made when preparing the plan in the early stages of the project.
emergency plan
A set of response plans designed in advance, commonly known as "Plan B", alternative plans
A response plan that can only be implemented when certain predetermined conditions occur
Requires a change of control procedure
Bounce back plan
A set of action plans prepared in advance, or a "guaranteed plan"
Used when response plans are scrapped due to risk or other issues
A plan that ends with minimal loss or goes too far
A plan to clean up the mess, using the most conservative measures
Requires a change of control procedure
contingency measures
Find a temporary solution, make a temporary rescue
Refers to when no countermeasures have been determined in advance or when the prespecified countermeasures are ineffective.
Before the implementation of contingency measures, the project must go through the control change process
Only when human life is at stake or when it is really too late to go through the procedures can contingency measures be taken first
If resolution is a priority, contingency measures can be used instead of bounce back plans
Automatic contingency: The most basic respect for human life, there are sufficient reasons to prove that it is too late to repay
Ordinary contingency needs to go through the change of control procedure
Automatic contingency does not require a change of control procedure
The relationship between risks and resources
emergency plan
Bounce back plan
contingency measures
Requires a change of control procedure
automatic contingency
No change of control procedures required
contingency reserve
Bureau of Management and Reserves
Use of both reserves requires a change of control procedure
risk response strategies
negative risk
1. Avoid
Modify or even abandon the project plan to avoid possible losses caused by identified risks.
Avoid it, just don’t do it! Eliminate it from the source! Yesterday I talked about the same question, whether to use new technology or old technology. Because there are risks in using new technology, we use old technology.
Project plan modification is to avoid
If the team believes that the risk of a sub-project is too high and does not take on the sub-project in advance but suggests that the customer find another supplier, this is risk aversion.
2. Transfer
Subcontracting work that you are not good at or have the ability to do to third-party partners is equivalent to transferring the risk of this part of the work at the same time.
include
Insurance
outsourcing
performance bond
Guarantee
Guarantee
3. Reduce
Probability
Influence
Reduce the probability and mitigate the impact
Risk mitigation refers to taking measures to reduce the probability and impact of threats. Mitigation measures include using simpler processes to conduct more tests, or choosing more reliable suppliers. These measures reduce the likelihood and impact of risks
Mitigation, literally, mitigating the impact of this risk may be through other means.
If there is a progress risk, then add more people. This will bring the progress back a bit, but it will not completely eliminate the risk.
influenza
positive risk
1. Develop
Create conditions to gain opportunities
For example: After Mr. Luo encountered setbacks in his business, he tried Douyin live broadcast to bring goods, and opened up a new path.
2. Share
Through cooperation, share opportunities with other parties in exchange for resource advantages that you do not have.
For example: a team that relies on its own technology to start a business cooperates with investors in exchange for funds, and cooperates with platforms in exchange for traffic. While achieving others, it also achieves itself.
Share, cooperate
3. Improve
Improve opportunities and bring potential benefits by increasing resources, etc.
For example: when a new product has proven to have huge market demand, add people to work overtime to expand production capacity and increase market share.
Positive and negative logical relationships
Exploitation--avoidance
Share--Transfer
improve--reduce
relation
Both positive and negative
1. Reporting: When a threat or opportunity exceeds the scope of the project manager or the team's ability to respond, the project manager needs to report it to a higher level so that measures can be taken to avoid the consequences of the risk or to increase the benefits of the opportunity.
2. Accept
Acknowledge the existence of risks, but do not take proactive measures to avoid, transfer or reduce risks, but accept the impact of risks.
The risk acceptance strategy is recommended when the project cannot handle or manage the risk, and when the risk level is low. liu
In this case, your team expects the consequences of the risk to be low impact or is unable to design an appropriate response strategy.
The team bites the bullet and is willing to bear the penalty stipulated in the contract if it cannot deliver on time. This is risk acceptance.
Classification
Active acceptance: The project plan will not be modified, but contingency reserves will be established, including reserving time, funds or resources.
Passive acceptance: The project plan will not be modified, and contingency reserves will not be established. Risks will be reviewed regularly to ensure that they have not changed significantly.
Implement risk responses
Factors influencing the choice of coping strategies
Control Risk: The process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk processes throughout the project
Oversight risk
Monitoring risk is the process of overseeing the implementation of risk response plans throughout the project, tracking known risks, identifying and analyzing new risks, and evaluating the effectiveness of risk management over time.
For example: Crosstalk on the 81st Floor
The probability of risk will gradually decrease as the project progresses, because times may have changed and the conditions for the risk to occur are no longer met; however, the impact of the risk will continue to increase as the project progresses, because more and more resources are invested, so the risk becomes higher. The later it happens, the greater the loss.
Key points for the exam in this chapter
1. Individual risk and overall risk ««««
2. Integrated test risk management «««
3. Risk classification ««««
4. Risk probability and impact matrix «««
5. Risk simulation (Monte Carlo technology)««««
6. Decision tree ««««
7. Risk response strategies «««««
8. Risk response tools «««««
9. The relationship between risks and resources «««««
10. Risk factors and project life cycle«««