PMI North Area PMP Exam Study Group

1
PMI North Area PMP Exam Study Group

• Risk Presentation
• Prepared by Denise Robertson
• 15 March 2003

2
Risk Management Processes

• Process I/O and Tools/Techniques emphasized on
  exam, so memorize them
• Memorize process in order
• Risk Management Planning
• Risk Identification
• Qualitative Analysis
• Quantitative Analysis
• Risk Response Planning
• Risk Monitoring and Control

3
Risk Concepts

• Risk tolerance
• Risk adverse
• Risk factors
• Probability
• Impact
• Range of possible outcomes
• Expected timing in project life cycle

4
Unknowns

• Risks are also called Unknowns
• Known Unknowns are identified during Risk
  Management and are documented in the project plan
• Can be planned for with Risk Response
• Unknown Unknowns are unanticipated risks
• Cannot be planned for in advance

5
Policy Level

• Organizations Risk Management Policy on how to
  approach risk is now part of PMBOK
• Policy describes
• Level of tolerance
• Level of acceptable risk

6
Project Status

• 3 possible statuses
• In Jeopardy
• Committed to
• Approved

7
Risk Probability/Impact Matrix

• 2-D rating system that rates
• Likelihood (probability) of a risk occurring
  between 0.0 and 1.0 or 100 certainty
• Impact of risk should it occur
• Impact scale can be
• Ordinal (ordered)
• Cardinal (assigned numeric values)
• Risk Score Probability Impact

8
Evaluating Project Data for Use in Assessing Risk

• Assumption Testing Criteria
• Stability of assumption
• Impact to project if assumption proves false
• Data Precision Ranking Accuracy Dependencies
• Extent risk is understood
• Data available about risk
• Quality of data
• Reliability and integrity of data

9
Monte Carlo Simulation

• Used in Quantitative Risk Analysis and Cost
  Analysis
• Evaluates the project, not the tasks, however
• Provides probability of completing project on any
  specific day or for any specific task
• Provides probability of any task actually being
  on the critical path
• Provides percent probability that each task will
  be on critical path
• Takes into account path convergence
• Translates uncertainties into impacts to total
  project
• Can be used to assess cost and schedule impacts
• Results in probability distribution

10
Decision Tree Analysis

• Quantitative Analysis Tool
• Diagram describes decision and probabilities
  associated with choices
• Determines aggressive or conservative route to
  highest Expected Monetary Value (EMV)
• Total of Probabilities Consequences for a
  Choice Event EMV

11
Cost Reserve

• PMI recommends at least 10
• OR
• Based on EMV
• Total of Probability Risk Cost for all risks
• Remember risk can be negative or positive

12
Risk Response Techniques
13
Residual and Secondary Risks

• Outputs from Risk Response Planning
• Residual Risks are those that remain after
  Avoidance, Transference, and Mitigation have been
  taken.
• Secondary Risks arise as a direct result of
  implementing a risk response
• Secondary risks should be identified and
  responses planned