PROJECT RISK MANAGEMNT

Instructor: Simachew Mulugeta (PhD)

 Course Objectives
The course deals with the basic concepts of Risk Planning, Identification, Analysis, Response, Controlling and
Mentoring
At the end of this course, students will:
• Explain risk, Project risk and Risk Management
• Discuss the various types of project risk management processes ;
• Explain how risk can impact a project, identify the components of the risk management plan and
risk register and their relationship to the project management plan as well describe the techniques
involved in risk identification and analysis
• Explain how the probability and impact of risk can be assessed and how risk events can be
prioritized
• Recognize the difference between qualitative risk analysis and quantitative risk analysis and
explain when either or both should be used
• Describe how to make project decisions when outcomes are complex and are affected by
uncertainty
• Explain how risk planning, risk analysis, risk response planning, and risk monitoring and controlling
are related
• Employ the various management responses to positive and negative risks,
 Course contents (Six Chapters)
Chapter One
1.Introduction to Project risk management
1.0. Defnining project, Project Mgt
1.1 Defining Risk
1.2 Risk Management
2.3 Project risk management
1.4 Components of Risk
–5 Project Selection and Risk
1.6 Project Risk planning processes and elements
1.7 Risk Utility, Risks Preferences and Risk Propensities
–8 Risk management process .
1.9 Projcet Risk planning
 Chapter Two
2. Identifying Project Risks

2.1.How to identify project Risks:

identification tools and techniques
2.2 Sources of Scope Risks
2.3 Sources of Schedule Risks
2.4 Sources of Resources Risks
2.5 Cause-risk-effect Statements
2.6 Project Priority Matr
 Chapter Three
3. Analysing and Evaluating Project Risks
3. 1Qualitative Risk Analysis
•3.1.1 Risk Probability Scales
•3.1.2 Risk Impact Scales
•3.1.3 Risk Assessment Matrix
•3.1.4 Assumptions Testing
•3.1.5 Risk and Cognitive Biases
•3.2 Quantitative Risk Analysis
•3.2.1 Expected Monetary Value (EMV)
•3.2.2 Decision Trees Analysis
•3.2.3 Monte Carlo Simulation
•3.2.4 Scenario Analysis
•3.2.5 Sensitivity Analysis
•3.3 Risk Evaluation
 Chapter Four
4.Developing Projcet Risk Response Strategies and
Implement Risk Responses process
4.1 Defining Risk Response &Categories of Common Risks
4.2 Risk Response Planning
4.3 Risk response strategies
4.3.1 Strategies for Negative Risks (Threats)
4.3.2 Strategies for Negative Risks (Threats) Strategies for Negative
Risks (Threats) Strategies for Negative Risks (Threats) Strategies for
Negative Risks (Threats) 4.4 Risk Management Timeline
 Unit 5
MONTORING AND CONTROLLING PROJECT RISKS
5.1Defining Risk Monitoriand Control ng and Control
5.2 Inputs to Risk Monitoring
5.3 Tools and Techniques for Risk Monitoring & Control
5.4 Output from Risk Monitoring & Control
5.5 Implementing Response Plans
5.6 Metrics for Project Risk Reduction
5.7 Risk register
5.8 Project risk Reviews, trend analysis and risk reassessment
 Evaluation:The method of assessment will consist of the following:

• Individual assignmnets/ project work = 50%

• Final Exam = 50%

8
 Key concepts & terminologies
• Project
• Project Management
• Risk idnetfication
• Risk
• Project risk • Risk analyis
• Projcet riks management • Risk response and mitigation
• Hazard, Disaster, Vulnerability Capacity • Risk control
• Risk register , • Disaster Risk Management
• Disaster Risk , • Disaster Risk Reduction
• Secondary risk ,
• Residual risk
• Resilience /Resilient
• Customer risk • Value chain /supply chain
• Stakeholder risk • Sensitivity Analysis
• Project complexity • Monte Carlo Analysis
• Risk Triggers • Quantitative Risk Analysis
• Risk tolerance
• Risk appetite
• Qualitative Risk Analysis
• Risk category
• Delphi technique
• Decision tree analysis
• Risk Register
• Risk breakdown structure
• Risk Management plan
• Risk Response plan
 Chapter One
1.Introduction to Project Risk Management
1.0 PROJECT MANAGEMENT
• THE PROJECT MANAGEMENT BODY OF KNOWLEDGE (PMBOK)
• PMBOK recognizes 5 basic process groups and 10 knowledge areas typical of almost all
projects and the 47 (49) process . The basic concepts are applicable to projects, programs
and operations.
 The five basic process groups are:
• Initiating/ identfication
• Planning
• Executing/ implementation
• Monitoring and Controlling
• Closing
 The Ten knowledge areas are:
• Project Integration Management
• Project Scope Management
• Project schedule Management
• Project Cost Management
• Project Quality Management
• Project Resource Management
• Project Communications Management
• Project Risk Management
• Project Procurement Management
• Project Stakeholders Management
 1.1 Defining Risk
• What is risk? What picture comes to your mind when you hear the word “Risk”? Can you define risk?,
How does it influence the success behind a project?
• Risk is an uncertain event or condition that, if it occurs, has a
positive or negative effect on a project objective.
• Risk is an uncertain event or set of circumstances that, should it
occur, will have an effect on the achievement of the project‘s
objectives.
• Decision-theorists take a similar approach, separating decisions under risk‘ where the
probabilities of different outcomes are known (or at least knowable) from decisions under
uncertainty ‘where probabilities are unknown (and maybe unknowable). Some philosophers
suggest that as a result uncertainty‘ belongs to the subjective realm of belief, while risk‘ has an
objective component based in fact or truth. Not all uncertainties are risk
• In other words, R = P x C where, R = Risk, P = probability of unfavorable outcome, C =
consequence of unfavorable outcome
• Risk = f(event, uncertainty, damage)
• Risk = f(hazard, safeguard)
• “A combination of the probability of a defined threat or opportunity (likelihood)
and the magnitude of the consequences of the occurrence (impact) defines a risk
index.

• An undesirable situation or circumstance that has both a likelihood/ possibility

of occurring and a potentially negative consequence.

• Risk is inevitable in a business organization when undertaking projects.

However, the project manager needs to ensure that risks are kept to a minimal.

• Risks can be mainly divided between two types, negative impact risk and
positive impact risk, or Internal/ controllable and external /uncontrollable
• Not all the time would project managers be facing negative impact risks as
there are positive impact risks too. Once the risk has been identified, project
managers need to come up with a mitigation plan or any other solution to
counter attack the risk.
 1.2 Project Risk
• All projects are risky since they are unique undertakings with varying degrees
of complexity that aim to deliver benefits.
• Project risk is an unpredictable event that causes a project to not go as planned.
It is an uncertain event or condition that, if it occurs, has a positive or negative
effect on a project objective.
• Here are the most common examples of project risk:-scope risks ,cost risks, time
risks, technology risks, resource risks, communication risks ,procurement risks,
miscellaneous risks.
• Project Risk is the cumulative effect of the chances of an uncertain occurrence
that will adversely affect project objectives. Risk Management is a systematic and
explicit approach for identifying, quantifying, and controlling project risk.
• Risk management, as an integral part of project management, occurs on a daily
basis.
• With proactive risk management, we look at projects in a comprehensive manner and assess and
document risks and uncertainty.
 1.3 Project Risk Management
• Project risk management is defined as the intentional, systematic process of planning for,
identifying, analyzing, responding to, monitoring and controlling project related risks.
• Project Risk management involves people, processes, tools, and techniques that will contribute, to
the greatest extent possible, to maximizing the probability of successful results.
• Project Risk Management :a process for identifying, communicating, and managing project risks
through all phases of project delivery.
• Project risk management is the art and science of identifying, analyzing, and responding to risk
throughout the life of a project and in the best interests of meeting project objectives.
• Main processes include:
– Plan risk management
– Identify risks
– Perform qualitative risk analysis
– Perform quantitative risk analysis
– Plan risk response and implement risk responses
– Control risks
Managers can plan their strategy based on five steps of risk management which prevails in a project/
an organization. Following are the steps to manage risks effectively in an organization:
 Risk management cont...
 An iterative/ repetative process to identify, assess, reduce, accept, and control risks in a
systematic, proactive, comprehensive and cost effective manner, taking into account the
project/business, costs, technical, quality and schedule programmatic constraints.
 It is a process to:-
-Identify all relevant risks
-Assess / rank those risks
-Address the risks in order of priority
-Monitor risks & report on their management
 The Risk Management Process consists of a series of steps that, when undertaken in
sequence, enable continual improvement in decision-making.
 Risk Management is the name given to a logical & systematic method of identifying,
analysing, treating and monitoring the risks involved in any activity or process.
 Risk management is often overlooked(i.e unnoticed /ignored) in projects, but it can help
improve project success by helping select good projects, determining project scope, and
developing realistic estimates
 Benefits/ pupose of Risk Management
• Is it necessary to manage project risks? Yes, Absolutely ...why?)
• Identify factors that are likely to impact the project objectives of scope, quality, cost and time
• Quantify the likely impact of each factor
• Give a baseline(reference) for project non-controllables
• Mitigate impacts by exercising influence over project controllables
• The pmbok also points out that risk management includes maximizing the results of positive events
and minimizing the consequences of adverse events.
• More and better information is available during planning and decision making
• Project objectives are verified
• Improved communications
• Higher probability of project success
• Proactive approach and
• Project might be canceled
 Promotes good management
 May be a legal requirement depending upon industry or sector
 It is important that risks are managed because they could negatively affect key aspects of the
organisation as well as its overall success
 To increase predictability and to improve probability of success 16
 Among others....
• Tips for Success Risk Managmnet
• Involve all levels of staff & management in the process
• Check controls are relevant & effective
• Ensure risk owner takes responsibility for management of risks under
their control
• Focus on risk cause, not its symptoms

• Why Risk Management(RM)may Fail ?

• Limitations of scope
• Lack of top management support
• Did not engage all stakeholders
• Failure to share information
• RM not embedded within planning & management system
 Who
Who uses
uses Risk
Risk Management?
Management?

Risk Management •• Finance

Finance and
and
practices are widely used Investment
Investment
in public, NGOs and the
•• Insurance
Insurance
private sectors, covering
a wide range of activities •• Health
Health Care
Care
or operations.
•• Public
Public
These include: Institutions
Institutions
•• Governments
Governments
 1.4 Components and Types of Risk
• What are the Components of Risk
• "Risk consists of three parts: an uncertain events or situation, the likelihood of occurrence
of the situation, and the effect (positive or negative) that the occurrence would have on
project success.
 A risk must also be an event. Therefore, terms like cost, schedule and performance do not
meet the definition of risk we use because they are not events. However, a future event in
the program schedule or a future event that measures system performance could be a risk.
 The probability of the future event occurring must be greater than 0% but less than 100%.
Future events that have a zero or 100 % chance of occurrence are not risks.
 The impact or consequence of the future event must be unexpected or unplanned for.
Attitudes to risk, both the organization and stakeholders can be influenced by a number of
factors, which are broadly classified into three groups. 1. The risk appetite is the
uncertainty of an entity that is willing to take the risk in anticipation of a reward. 2. Risk
tolerance is the degree, amount or volume risk for an organization or an individual will
exhibit resistance. 3. Risk Threshold refers to measures relating to the impact of risk on the
project, stakeholders in this situation may have an interest.
 Types of projcet risks
• The Differences Between Internal (Controllable) & External (uncontrollable) Risks in Projects
• As internal risks, example the 9 project mgt Knowledge areas) the following risks were listed as example :
• Cost Risks: Risks of project costs being exceeded due to inaccurate estimates of costs or creeping scope changes.
• Schedule Changes: Risks that activities take longer than expected, which in turn usually leads to cost increases, later
benefits and a possible loss of competitiveness.
• Performance or Quality risks: Risks that the project fails to deliver the planned results with the promised performance and
quality. All these risks arise from project execution.
• As external risks, the following examples were listed as example :
• Governance risks: These are related to business management, project support, leadership and corporate reputation.
• Strategic risks: These result in errors in the strategy definition, e.g. in using a technology that does not bring the desired
success.
• Operational risks: This results from poor implementation and process problems, e.g. in purchasing, production and sales,
but also in protection against theft and fraud.
• Market risks: These include competition risks, currency risks, commodity and interest rate risks as well as liquidity and
credit risks.
• Legal risks: These arise from changes in regulatory requirements, contract risks or patent risks.
• Environmental risks: Risks related to earthquakes, storms, flooding, vandalism, sabotage, civil unrest or strikes
Project Risk:
This slide shows schematically how the function of project risk management
is tied into the remaining nine PMBOK management functions. Risk
management should be established as a continuing integrative function
throughout the project’s life cycle

Integration
Communication
Scope
Stakeholders

Project Risk
Time Cost

Quality
Procurement
Human Resources

23
 Matching : individual work / Self assessment quiz
Match

1 Integration A. Defining contracts and choosing a contractor

2 Scope B. Keeping everybody working toward the same goal and dealing with
changes

3 Quality C. Budgeting your project and tackling the money you are spending

4 Cost D. Getting people who will do the work and keeping them motivated

5 Procurement E. An individual, group, or organization who may affect, be affected by, or

perceive itself to be affected by a decision, activity, or outcome of a
project.

6 Time F. Making sure that you build the right product and that you do it as
effectively as possible

7 Stakeholder G. Figuring out who should talk to whom to keep everybody in the loop
about your project

8 Communication H. Estimating the duration a project will take

9 Human Resources I. Defining the work that you will (won’t) do on the project
• Risk exists at two levels within every project.
(i) Individual project risk is an uncertain event or condition that, if it occurs, has a
positive or negative effect on one or more project objectives.
(ii) Overall project risk is the effect of uncertainty on the project as a whole, arising
from all sources of uncertainty including individual risks, representing the exposure
of stakeholders to the implications of variations in project outcome, both positive and
negative.
Project resilience. The existence of emergent risk is becoming clear, with a growing
awareness of so-called unknowable-unknowns. These are risks that can only be
recognized after they have occurred.
Emergent risks can be tackled through developing project resilience. This requires
each project to have:
(i) Right level of budget and schedule contingency for emergent risks, in addition to
a specific risk budget for known risks;
(ii) Flexible project processes that can cope with emergent risk while maintaining
overall direction toward project goals, including strong change management;
(iii)Empowered project team that has clear objectives and that is trusted to get the job
done within agreed upon limits;
(iv)Frequent review of early warning signs to identify emergent risks as early as
possible; and
(v) Clear input from stakeholders to clarify areas where the project scope or strategy
Common Types of Risk in Business ( in some cases for Projcets)

A business risk is a future possibility that may prevent you

from achieving a business goal.
•The risks facing a typical business are broad and include
things that you can control such as your strategy and things
beyond your control such as the global economy.
•There is a strong relationship between risk and reward. It's
generally impossible to achieve business gains without taking
on at least some risk. Therefore, the purpose of risk
management is not to completely eliminate risk.
•In most cases, risk management seeks to optimize the risk-
reward ratio within the bounds of the risk tolerance of your
business.
•Example : The risk-reward ratio measures how much your
potential reward is, for every dollar you risk. For example: If you
have a risk-reward ratio of 1:3, it means you're risking $1 to
potentially make $3. If you have a risk-reward ratio of 1:5, it
means you're risking $1 to potentially make $5
• The following are common types of business risk.
1. Competitive risk: The risk that your competition will gain
advantages over you that prevent you from reaching your goals. For
example, competitors that have a fundamentally cheaper cost base
or a better product.

2. Economic risk: The possibility that conditions in the

economy will increase your costs or reduce your sales.
3 Operational risk: The potential of failures related to the day-to-day
operations of an organization such as a customer service process.
It is the result of insufficient or failed processes. However, operational
processes that are considered to be complete and successful also
generate risk.

4. Legal risk: The chance that new regulations will disrupt your
business or that you will incur expenses and losses due to a legal
dispute

5. Compliance risk: The chance that you will break laws or regulations.
In many cases, a business may fully intend to follow the law but ends
up violating regulations due to oversights or errors.
6. Strategy risk: The risks associated with a particular strategy.
7. Reputational risk: Reputational risk is the chance of losses
due to a declining reputation as a result of practices or
incidents that are perceived as dishonest, disrespectful or
incompetent. The term tends to be used to describe the risk of a
serious loss of confidence in an organization rather than a minor
decline in reputation.
8. Program risk: The risks associated with a particular business
program or portfolio of projects.
9. Innovation risk: Risk that applies to innovative areas of your
business such as product research. Such areas may require
adapting your risk management practices to fast paced and
relatively high risk activities.
10. Country risk: Exposure to the conditions in the countries in
which you operate such as political events and the economy.
11. Quality risk: The potential that you will fail to meet your
quality goals for your products, services and business practices.
•
12. Credit risk: The risk that those who owe you money to fail to pay. For
the majority of businesses this is mostly related to accounts receivable risk.
13. Exchange Rate risk The risk that volatility in foreign exchange rates will
impact the value of business transactions and assets. Many global
businesses have high exposure to a basket of currencies that can add
volatility to financial results such as operating margins.
•
14. Interest Rate risk: The risk that changes to interest rates will disrupt
your business. For example, interest rates may increase your cost of capital
thus impacting your business model and profitability.
•
15. Taxation risk: The potential for new tax laws or interpretations to result
in higher than expected taxation. In some cases, new tax laws can
completely disrupt the business model of an industry.
• 16. Process risk: The business risks associated with a particular process.
Processes tend to be a focus of risk management as reducing risks in core
business processes can often yield cost reductions and improved revenue.
•
16. Resource risk: The chance that you will fail to meet business goals due
to a lack of resources such as financing or the labor of skilled workers.
17. Political risk: The potential for political events and outcomes to
impede your business.
18. Seasonal risk: A business with revenue that's concentrated in a single
19 Health and safety risk is the potential for harm to come to
people as a result of your business activities. In many cases,
the concept is extended to include the general health and
safety of employees independent of work related hazards. For
example, employers may offer medical services or support for
a healthy lifestyle to reduce the risks that employees will
become sick. Eg workers in flower farms of Ethiopia ????

The potential that your business activities will have a negative

effect on human health or wellbeing. Often extended to
include the overall health of employees due to factors outside
the work environment.

A worker is injured on a construction site due to an

equipment failure. An employee suffers a repetitive strain injury
related to their duties. A customer is injured when items fall off
a shelf at a retail location.
 Categories of Risks(Cont....)
(I) Financial risk
Reduction in funding
Failure to safeguard assets
Poor cash flow management
Lack of value for money
Fraud / theft
Poor budgeting
(II) Operational risk
•These risks result from failed or inappropriate policies, procedures, systems
or activities e.g.
Failure of an IT system
Poor quality of services delivered
Lack of succession planning
Health & Safety risks
Staff skill levels
No process to track contractual commitments
 (III) Reputational risk
• Organization engages in activities that could threaten it’s good
name
 Through association with other bodies.
 Staff / members acting in a criminal or unethical way
•Poor stakeholder relations
(IV) Governance & Compliance risk
•Lack of oversight by Board
•Segregation of duties not defined formally
•Ensuring compliance with funders terms and conditions
•Compliance with applicable legislation
 Safeguarding of vulnerable individuals
 Taxation Law
 Data Protection
 Health & Safety Law
(v) Residual and Secondary Risks
•It’s also important to identify residual and
secondary risks
•Residual risks are risks that remain after all of
the response strategies have been
implemented..
•Secondary risks are a direct result of
implementing a risk response.
Risk categories
Risk to a project can arise from one of the following four categories
Risk breakdown structure ( RBS 0, 1 ,2
Benefits/ purpose of Risk Management
Is it necessary to manage project risks? Yes,
Absolutely ...why?)
• Identify factors that are likely to impact the project
objectives of scope, quality, cost, and time.
• Quantify the likely impact of each factor.
• Give a baseline(reference) for project non-controllable.
• Mitigate impacts by exercising influence over project
controllable.
• The PMBOOK also points out that risk management
includes maximizing the results of positive events and
minimizing the consequences of adverse events.
• More and better information is available during planning
and decision-making.
• Project objectives are verified. 31
Benefits/ purpose of Risk
Management
• Improved communications.
• Higher probability of project success.
• Proactive approach and
• The project might be canceled.
 Promotes good management
It May be a legal requirement depending upon the industry or
sector
It is important that risks are managed because they could
negatively affect key aspects of the organization as well as its
overall success
To increase predictability and to improve the probability of
success.
 1.2 Principles of Risk
Management
• According to PMI’s Standards for risk management 2019,
there are seven specific core principles that underlie the
process of risk management
1. Strive to achieve excellence in the practice
of risk management
2. Align risk management with organizational
strategy and governance practices
3. Focus on the most impactful risks
4. Balance realization of value against overall risks
5. Foster a culture that embraces risk management
6. Navigate complexity using risk management to
enable successful outcomes
7. Continuously improve risk management competencies
Principles of RM
1.Strive to achieve excellence in the practice of risk
management
• Increase the predictability of outcomes, both qualitatively
and quantitatively.
• It is about reaching the appropriate level of
organizational process maturity and the optimal level of
performance.
• Excellence can be achieved by
a) Balancing the benefits to be obtained with the
associated
cost and
b) Tailoring the risk management processes
to the characteristics of the
organization and its projects.
• Process excellence in risk management is itself a
risk management strategy.
Principles of RM
2. Align risk management with organizational
strategy and governance practices
• Project risk management in organizations is
developed and evolved in coexistence with
other organizational processes, such as
strategy and governance.

• Adjustments become necessary as the

organization evolves.
Principles of RM
3. Focus on the most impactful risks

• Identify the risks that directly influence goals

and objectives.

• Depends on the characteristics of the

organization, its environment, internal maturity,
culture, and strategy.

• Organizations develop and improve by refining

the processes for risk prioritization.
Principles of RM
4. Balance realization of value against overall risks

• Find the proper balance between the exposure to risk and the
expected business value creation or realization.

• Initiatives presenting a low level of risk may not create

a sufficient level of value and performance.

• On the other hand, initiatives presenting a high, expected

performance may expose the organization to an unacceptable
level of threat.
 Principles of RM
5. Foster a culture that embraces risk management

– Risk management is an inherent and essential part

project management framework.

– A culture of risk management encourages

a) Identification of threats rather than ignoring them
and
b) Identification of opportunities by cultivating a
positive mindset within the organization—one that
is more open to accepting and harnessing the
positive changes impacting the various initiatives.
 Principles of RM
6. Navigate complexity using risk management to enable successful outcomes
• Managing risks is an essential part of reducing and handling the complexity within organizational
initiatives.
• The ability to identify and manage risks is directly dependent on the level of complexity of the
initiatives.
• Concentrating efforts on clarifying the objectives, requirements, and scope of initiatives facilitates the
identification of risks and enhances the ability to manage them, thus lowering the exposure of these
initiatives to unforeseen situations.
• The more organizations navigate complexity using risk management, the more they will be able to
optimize the use of resources, increase the return on investments, and improve overall performance
and business result…………………….
Principles of RM
7. Continuously improve risk management competencies

• The nature of risks to which an organization is exposed

and the available technology to manage those risks are
changing.

• Technology allows organizations to manage risks

more effectively and to better focus on the risks’ impacts.
• Through improvement of risk
competencies,
continuous organizations and individuals can develop
management
sustainable competitive advantages that contribute to overall
organizational performance.
 1.6. Project Selection and Risk
Important types of project risk are best addressed by project selection
because they are outside the scope of project managers.
Some of the areas of risks during this phase are:-
(i) Business objectives of the project: All projects need to have a clear business
objective and how the project outcome meets the objective. This helps determine
whether the investments required to execute the project brings value to the business.
(ii) Risk profile of the organization: The other major area of risk during the project
selection phase is the risk profile of the organization. Risk profile of the organization

specifically the key stakeholders and the executives need to be taken into consideration
while selecting a project and also the mix of projects for execution.
 1. 7 Risk Utility, Risks Preferences and Risk Propensities
• Risk utility or risk tolerance is the amount of satisfaction or pleasure received from a potential
payoff. Each person has a natural preference towards risk, preference which depends on one‘s
own temperament. By knowing a person‘s preference towards risk, we can anticipate which
choices they are going to make. And the attitude towards risk can be of three types:
• Risk averse: It shows a conservatory attitude towards risk, with preference for safe results.
Utility rises at a decreasing rate for people who are risk-averse
• Risk seeking: It shows a liberal attitude towards risk, with preference for speculative results.
Those who are risk-seeking have a higher tolerance for risk and their satisfaction increases
when more payoff is at stake.
• Risk neutral: It shows an impartial attitude towards risk, with preference for future results.
The risk-neutral approach achieves a balance between risk and payoff
• Risk preference refers to the attitude people hold towards risks, which is a key
factor in studies on investors‘ decision-making behavior. Risk preference
commonly refers to the tendency to choose an action that involves higher
variance in potential monetary outcomes, relative to another option with a
lower variance of outcomes.
• . Risk propensity (RP) is a feature characterized by an increased probability
of engaging in behaviors that have some potential danger or harm but also
provide an opportunity for some benefit. የአደጋ ስጋት ተጋላጭነት
Developing a risk management process

A suggested approach for developing a risk management process is

to:-
• Make a board commitment to risk management and appoint one
member responsible for the process.
• Identify key people to be involved in the process (stakeholders,
coaches, instructors, treasurer, staff, event coordinator, etc.).
• Set up a committee to undertake the risk management process and
report to the board regularly.
• Communicate your risk management strategies to everyone in your
organisation.
• Monitor and review your risk management plan regularly and at the
board level.
• The project risk management process (see Figures above slides ) is
not difficult. A full project risk management effort includes these
processes:
1. Risk Management Planning – Deciding how to approach, plan, and
execute the risk management activities for a project.
2. Risk Identification – Determining which risks might affect the project and
documenting their characteristics.
3. Qualitative Risk Analysis – Prioritizing risks for subsequent further
analysis or action by assessing and combining their probability of
occurrence and impact.
4. Quantitative Risk Analysis – Analyzing probabilistically the effect of
identified risks on overall project objectives.
5. Risk Response – Developing options and actions to enhance
opportunities and to reduce threats to project objectives.
6. Risk Monitoring – Tracking identified risks, monitoring residual risks,
identifying new risks, executing risk response plans, and evaluating
their effectiveness throughout the project life cycle.
• At its foundation, project risk management involves asking and answering a few
simple questions:
• What risks might negatively (threats) or positively (opportunities) affect
achieving the project objectives? (Risk identification)
• Which of these are most important? (Qualitative risk analysis)
• How could these affect the overall outcome of the project in probabilistic terms
of cost and schedule? (Quantitative& risk analysis)
• What can be done about it? (Risk response)
• Having taken action, how did the
responses effect change,
and where is the project now?
(Risk monitoring)
• Who needs to know about this?
(Communication)
TH
AN
KY
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