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Objectives :
The objectives of this lecture are to: Introduce Risk Handling Strategies. Explain the objectives of risk handling. Devise risk tracking and risk process implementation. Compare risk acceptance and risk transfer. Assess the importance of contingency reserves.
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Lecture Outline
Introduction Risk Handling Strategies Risk Handling Strategies Objectives
Introduction
Risk handling is the process of risk identification, analysis, and response.
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Risk function
Identify
Monitor
Assess
Control
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Risk Tracking
Risk tracking assures that established controls are functioning properly and thus supports proactive system management. It depends on efficiently breaking the process of risk monitoring into small bits of information. It can range from basic monitoring knowledge to risk monitoring job supporters such as templates and examples.
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Risk Acceptance
Risk acceptance is an informed decision taken to accept the consequences
and likelihood of a particular risk. An organisation should manage its risks to balance the opportunities
against the potential losses for the overall improvement of the business.
The quantity of risk that an organisation is able to take is often called as its 'risk appetite' or 'risk tolerance. Every organisation can accept a level of risk, If risk mitigation costs are higher than the probable losses. If risks require mitigation but it is not possible.
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Risk Mitigation
Risk mitigation refers to the systematic reduction in the likelihood of risk occurrence. It is also called as risk reduction. Risk mitigation includes the following actions: Prioritising actions Evaluating recommended control options Conducting cost-benefit analysis Selecting control Assigning responsibility
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Risk Transfer
Risk transfer is the shifting of responsibility or burden for disaster or loss, to another party through legislation, contract, insurance or other means. A good risk response plan identifies the third party to whom certain risks can be transferred. It always make the best case scenario less good, the worst case scenario less bad. It displaces the expected monetary value towards lower benefit.
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Risk Avoidance
Risk Avoidance refers to reducing risk to the organisation through better management information. Risk Avoidance is a business strategy.
Risk Avoidance is a technique of risk management that involves: Taking steps against a hazard. Engaging in alternative activity, or otherwise end a specific exposure.
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Contingency Reserves
Contingency reserves refers to the funds or other financial resources that is required to reduce the risk of overruns. It is used to deal with unknown risks and accepted known risks. It covers risk events that are not accounted for in the project baseline duration and cost estimations.
The considerations for contingency plan are : Actions Scope Initiation Roles and responsibilities
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Risk Documentation
Risk Documentation is an important aspect of risk management. It has to be done for the entire risk management process. It includes data from: Planning Assessment Handling Monitoring activities
Documentation of risk management activities include creating: Risk management plan Risk information form(s) Risk assessment report Risk handling priority list Risk handling plan of action
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Summary
Risk handling means risk treatment. The five Risk handling strategies were discussed.
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Activity
Consider that you are a project manager for one of the long term
project. In your project if the team members are taking more leaves
which causes and might cause huge delays in the project delivery timelines, how would you address the issue of risk appetite here and what would be the risk mitigation steps that you might take?
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