Project Risk and Procurement

Management
Unit 3
 The Cycle of Risk Management
• ,

Risk
Identification

Risk Analysis

Risk Monitoring
and Control

Risk Response
Managing Risk throughout the project
• Risk changes throughout the life of a project
• Risks that seemed significant at the beginning
may in practice be less than we expected
• Risks that were ignored or treated as negligible
may turn out to be significant
• In consequence, risk needs to be continually
monitored and responses made
• Risk management is one of the most difficult of
managerial tasks because of this.
 Risk Response Planning - Negative
• After identifying and quantifying risks, you
must decide how to respond to them.
• There are four main response strategies to
negative risk:
– Risk avoidance
– Risk acceptance
– Risk transferance
– Risk mitigation
 Risk Response Planning - Positive
• Strategies for positive risks:
– Exploit
– Share
– Enhance
– Accept
 Risk responses
• Although the strategies for dealing with
project risk all into four categories the actual
responses depend on circumstance, cost,
availability of resources etc.
• For example, when faced with the risk of
labour shortage on a building project a risk
response could be: to increase pay levels; or
to hire from overseas; over recruit; mechanise
etc.
 Monitor and Control
• This happens throughout the project:
– Monitoring of all key areas like cost, schedule,
quality etc.
– Collect information continually
– Initiate review of risks
– Take corrective action
 Top 10 Risk Tracking
• This is a technique to maintain awareness of
risks throughout the life of a project.
• Establishes a periodic review of the top 10
project risk items
• Lists the current ranking, the previous ranking,
number of times the risk appears on the list
over time, and summarises the progress made
in resolving the risk item.
 Risk Register
• A risk register is:
– A document that contains the results of various
risk management processes: often displayed in a
table or spreadsheet.
– It contains a list of the risks, ranking of the risks
and information about these risks
– It is used to manage risk and to store all the
information pertinent to risk managing the project
in one place so that it can be accessed and used to
manage future projects.
Risk Register Example