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Risk Management Example

The document discusses risk management for a project. It outlines identifying risks through a risk register containing descriptions, categories, causes, and consequences of key risks. A probability and impact score is assigned to each risk to calculate an exposure score. A quantitative analysis then assigns monetary impacts and probabilities to each risk to calculate exposure amounts. Response plans are outlined for critical risks, including avoiding, transferring, mitigating, or accepting the risk. The most effective approach to reduce the exposure of assembly workers calling in sick involves mitigating the risk through measures like vaccinations and sanitation protocols.

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Daniel Reckerth
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82 views

Risk Management Example

The document discusses risk management for a project. It outlines identifying risks through a risk register containing descriptions, categories, causes, and consequences of key risks. A probability and impact score is assigned to each risk to calculate an exposure score. A quantitative analysis then assigns monetary impacts and probabilities to each risk to calculate exposure amounts. Response plans are outlined for critical risks, including avoiding, transferring, mitigating, or accepting the risk. The most effective approach to reduce the exposure of assembly workers calling in sick involves mitigating the risk through measures like vaccinations and sanitation protocols.

Uploaded by

Daniel Reckerth
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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RISK MANAGEMENT

Daniel Reckerth
Suppose that during the initial risk identification phase for a project, a
risk register is made containing the most important risks to the project.

Risk Register
ID Description Category Causes Consequences
1 Chip shortage Resources Global chip Temporary halt or
shortage slowdown in production
2 Assembly workers call in sick Personnel Seasonal flu Temporary decrease in
Covid 19 production
3 Transport trucks breakdown Delivery Weather conditions Order delay
Following a qualitative analysis, a probability and impact score is given to
each risk, calculating the exposure score.

ID Description Probability (1-10) Impact (1-10) Exposure


1 Chip shortage 6 9 54 Medium
2 Assembly workers call in sick 7 10 70 Critical
3 Transport trucks breakdown 4 6 24 Low
Second step implies a quantitative analysis, turning probabilities and impacts
in quantifiable budget impacts. Done via simulations such as Monte Carlo
analysis.

ID Description Probability (%) Impact ($) Exposure


1 Chip shortage 30% $40,000 $12,000
2 Assembly workers call in sick 50% $50,000 $25,000
3 Transport trucks breakdown 10% $15,000 $1500
Risk Response Plans for Critical Risk
1. Avoid
• Implies to eliminate the risk, i.e. to have assembly workers avoid getting sick which is improbable (after work)
• Change deliverables (products) date, extend the schedule
• Risk exposure = 40% * $70,000 = $28,000
2. Transfer
• Offload the impact of the risk to other party, i.e. hire another firm to handle assembly of the product
• Risk exposure = 30% * $70,000 = 21,000
3. Mitigation
• Reduce the probability or impact of the risk
• Vaccinate workers, provide testing, provide masks, provide sanitation measurements
• Risk exposure = 25% * $50,000 = $12,500
4. Accept
• The risk will be accepted, stakeholders acknowledge the risk
• Contingencies (time, budget) built in to allow for the consequences of the risk
• Risk exposure = 50% * $50,000 = $25,000

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