Project risk

planning, identification
and management
Introduction

Project risk identification

 essentials - planning phase onwards
 key in mitigation strategies
 helps in awareness of uncertainties
 elements for project success
We may look at 10 common project risks
and 6 ways to solve project risks
Topic 3: Examine the need and cost of risk management in a project

 need for risk management in a project

 risk management costs
 effects of risks in a project

Topic 4: Explain the process of Project risk identification and measurement

 risk identification
 ways of measuring risk
 sources or areas of risk in a project
Technology risk

The technological aspects when running a project is a complex deliverable

because there is a high turnover of new and advanced technologies
 Tech aspects pose critical threat to data security, organization services,
compliance and information security
 Risks associated with technology are more challenging
 IT programs often requires fresh personnel training and software
acquisition

 other technological-related risks like service outages that might lead to

delays and project failure.
Communication risk

 observe effective and timely communication

 significant work ethics that must be adapted
 setting up meetings with stakeholders,
- project donors
 track changes, reassign tasks and foster a cohesive team environment.
 Beware of critical components of effective communication,
 be careful of loss of data or misinformation and eventual project disruption.
Scope creep risk
Uncontrolled and unauthorized change to the initial intended project scope
 extra cost of additional features, products or functions
 Projects face this risk, others irreversible challenge due to added functions
 significant to the project and desirable to the project's success.
Cost risk
 A shortage or mismanagement of project funds resulting from an inflated
budget or other constraints is a threat to the project's completion
 When the project cost is higher than the budgeted funds, the risk shift to
other operations and workforce segments
 The reduction of the funds - contribute to an occurrence of a scope risk.
Operational risk
A project may stall or terminate if there is a poor implementation of critical
operations and core processes such as production or procurement. The risks
could result in a direct or indirect loss owing to inadequacy or failed
qualitative, quantitative or strategies. Depending on the project type,
operational risks are:
 IT system risk
 Human and process direct implementation risk
 Human and process indirect implementation risk
 Financial capacity risk
Health and safety

Health and safety is a type of risk that can compromise a company's

compliance rules example: of covid-19

 Organization - its health and safety standards ought to be monitored and

evaluated regularly to identify potential risks; a major cause of company losses or
fines.
 The risk underpins staff or customers' health complications; to not
jeopardise company's reputation

 The management is responsible in establishing continuous health and

safety risk monitoring in the company premises and its products or
services.
Skills resource

 Leveraging on internal staff a potentially high-project risk

 project activities may be in different waves at various locations, requiring

in- house personnel attendance.
 The overlap of the waves becomes a potential distress source

 Staff incompetence in project divisions is another risk that may pose

additional cost of personnel retraining or transfers.
Performance risk

 When a project is unlikely to achieve the results as intended, - a perceived

performance risk
 an inherent impact on the overall performance of the business
 such a problem causes additional financing, or a likely penalty for non-
performance; it may also
 leverage the competitors' performance.
Market risk
When a project fails to meet the stated results, market risk is likely to occur
 Competitors might take the advantage to cripple the business and eliminate it
from the market.
 Another market risk could occur in commodity and foreign market trends,
which might not favour the project's initial estimates
 Liquidity, credit and fluctuation of interest rates also pose as a potential
market distracter to the project's product sales.
External hazards risk

 A likely adverse event beyond the control of the project management is a

potential risk.
Example: pandemic causing lockdowns globally
 Such risks manifest in various types and forms, including terrorism, storms,
floods, vandalism, earthquakes and civil unrest, epidemics….
 A project may stall or discontinue when such events occur.
 By employing appropriate monitoring measures, organizations can prevent
heavy damage or losses resulting from an unforeseen external hazard.
Six guidelines to solve project
risks
 The uncertainty is inherent in most technological projects. The risks often land
the organization into trouble due to failure or inadequate project risk mitigation
and contingency measures.
 Some project risk mitigation measures to help keep a project on track.

- Identifying the risks

- Prioritize and report the risks

- Link the possibility of each risk with its impact

- Develop and cultivate responses to the risks

-a contingency plan for each risk
- Record and track risks alongside their associated
tasks
Vigilant -Identify the risks
 Team may be obliged to prepare and review a list of all possible risks likely
to disrupt the project.
 Ensure that the key stakeholders understand the project's objectives and
design by conducting a series of brainstorming sessions.
 A conclusive report from the meetings should indicate all levels of risks .
Prioritize and report the risks
 Risks varying impacts on the project, select and develop a workable
mitigation strategy that can cause the highest loss.
 It is prudent to structure a scale and rank the risks to focus their input from
the highest threat; an in-depth discussion with the project steering
committee can focus their input.
 Reporting the risks also helps the project managers keep track of every
activity, which provides an accountability platform.
Link the possibility of each risk with
its impact
 Each risk can contribute to a low, medium or high impact
 As a team, you may develop a probability matrix to measure the risks versus
the impact.
 Such a matrix or an application help in decision-making as to likelihood of risk
compared to its effect to establish timely measures.
 Link a risk to its potential impact; essential for management as a roadmap
to the project's activities for an effective monitoring purpose.
Develop, cultivate responses to
risks
 By completing a project risk response strategy, you avert a potential threat
from happening or minimize the adverse effects should the problem be
unavoidable.
 It is also prudent to regularly review and monitor the risks
 ensure that opportunities to stop a potential threat are not missed.
Contingency plan for each risk

 In case a risk occurs, prepare a quick and reliable contingency plan ready
for action.
 Plan should neutralize or prevent further damage and prevent a continuation
of a crisis.
 Bring all stakeholders into the planning and implementation of a contingency
plan.
 Each task may have a different individual to monitor, it is easy to track
each potential risk and develop a response.

 The records also allow the stakeholders to focus on the prevailing situation
concerning the project progress.
Record and track risks with their associated tasks

 Recording the risks in terms of their associated task or process level

helps the management track potential risks.

 Record the identified risks in the risk register and store them in the
project's central server throughout the project.
 Each task may have a different individual to monitor, it is easy to track
each potential risk and develop a response.

 The records also allow the stakeholders to focus on the prevailing situation
concerning the project progress.
 Summary

The most important issues to consider and

dwelt upon are
 planning (identification)
 mitigation
 implementation of the project objectives
 monitoring
 evaluation
Lessons learnt and see the ‘back to future’
 Class activity
1. Whilst taking into consideration the
prevailing situation within and without
of the immediate business environment,
describe with plausible novelty
importance of planning (whilst
identifying project risks); managing risks
that are envisaged in projects.
2. A contingency plan should seek to answer the following questions:
 What should be done to reduce a likelihood of a risk?
 What should be done to manage risk if it occurs?
 What should be done to utilize effectively the opportunities brought
about by a risk?
Illustrate your answers with real examples.