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Risk Management Presentation ASQ- Greater Houston Section 1405

Risk Management Presentation ASQ- Greater Houston Section 1405. Lila Carden, Ph.D., MBA, PMP University of Houston Instructional Associate Professor lcarden@uh.edu. Agenda. ISO 31000 - Published in November 2009 Benefits of Risk Management 21 Ways to Excel at Project Management

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Risk Management Presentation ASQ- Greater Houston Section 1405

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  1. Risk Management PresentationASQ- Greater Houston Section 1405 Lila Carden, Ph.D., MBA, PMP University of Houston Instructional Associate Professor lcarden@uh.edu

  2. Agenda • ISO 31000 - Published in November 2009 • Benefits of Risk Management • 21 Ways to Excel at Project Management • Risk Management Processes • Risk Management Application • Top 10 Risk Issues • 10 Golden Rules of Project Risk Management

  3. ISO 31000Published in November 2009 • First international standard of risk management • Provides principles and generic guidelines on risk management • Plans will still need to include the needs of a specific organization • Standard that can be used by any public, private or community enterprise, association, group or individual • Not industry specific • Useful for all managers – operational, financial and project Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009. Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271

  4. ISO 31000Published in November 2009 • Framework to integrate the process of managing risks and reporting • Risk management processes include identifying, analyzing, responding, implementing and monitoring risks. • Two key functions throughout implementation • Communication and consultation need to include internal and external stakeholders • Monitor and review need to include controls, lessons learned, responses to risks and ready for change Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009. Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271

  5. Benefits of Risk Management • Establishes project feasibility • Lowers costs – rework and unforeseen late efforts are reduced • Establishes project priority and management support - risk plan noting competence and preparation • Enables project portfolio management – low risk and high risk projects • Exposes weakness in project plans • Plans management reserves • Facilitates project communication and monitoring – exposes weaknesses to the team Kendrick. T. (2009). Identifying and managing project risk. New York: AMACOM.

  6. 21 Ways to Excel at Project Management • Managing the risks is number 6 on the list • Top 5 include • Sponsorship and Leadership • Defining the business objectives • Defining the project • Ensuring the project is a manageable size • Defining the budget Haughey, D. ( 2013). 21 ways to excel at project management. Retrieved from http://www.projectsmart.com/

  7. Risk Management Processes • PMBOK’s project risk management processes include: • Plan Risk Management – how to conduct risk management activities • Identify Risks – determine risks and document characteristics • Perform Qualitative Risk Analysis • Perform Quantitative Risk Analysis • Plan Risk Responses • Control Risks PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  8. Plan Risk Management TABLE OF CONTENTS • 1.0Purpose Of The Risk Management Plan • 2.0risk management Procedure • 2.1Process • 2.2ROLES AND RESPONSIBILITIES • 2.3Risk Identification • 2.3.1Methods for Risk Identification • 2.4Risk Analysis • 2.4.1Qualitative Risk Analysis • 2.4.2Quantitative Risk Analysis • 2.5Risk Response Planning • 2.6Risk Monitoring, Controlling, And Reporting • 2.7Risk Contingency Budgeting • 3.0Tools And Practices • 4.0Closing a Risk • 5.0Lessons Learned

  9. Identify Risks • Techniques • Brainstorming • Interviewing • Root Cause Analysis • Delphi Technique – way to reach consensus of experts • Facilitator uses a questionnaire to obtain ideas • The responses are summarized then re-circulated to the experts for additional comments • Risk Breakdown Structure – structure for identifying risk PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  10. Identify Risk Risk Breakdown Structure

  11. Perform Qualitative Risk Analysis • Tool • Risk Priority Matrix - probability and impact

  12. Perform Quantitative Risk Analysis • Tools and techniques • Sensitivity Analysis – tornado diagram (useful for comparing importance and impact of variables) • Expected Monetary Value Analysis – decision tree • http://goo.gl/DXSglV • Modeling and Simulation – translates uncertainties to impact of project objectives • Monte Carlo • The model is computed many times with the input variables (cost estimates, durations) chosen at random for each iteration from the probability distributions of these variables. • A probability distribution (total cost or completion date) is calculated - • Example - 12% likely to meet the $41 million most likely cost estimate or a 70% likelihood of success with a budget of $50 million PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  13. Plan Risk Responses • Negative risks • Avoid – change plan to eliminate threat entirely or shut down project entirely • Transfer – shifts risk to third party (consultant) • Mitigate – reduce probability or impact • Develop prototype • Accept – not take any action • Contingency Reserve – time, money or resources PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  14. Plan Risk Responses • Positive Risks • Exploit – ensure opportunity is realized • Most talented resources • Enhance – increase the probably and/or impact • Adding more resources • Share – allocating all or some of the ownership of the opportunity • Joint ventures, partnerships • Accept – take advantage of the opportunity if realized PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  15. Control Risk Responses • Use Risk Register to • Implement risk response plans • Track identified risks • Identify new risks • Evaluate risk process effectiveness throughout the project – risk audits including project review meetings • Deliverable status • Schedule progress • Costs PMI Global Standard. (2013). A guide to the project management body of knowledge ((5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

  16. Application – Risk Overview Example • http://capstone.tamu.edu/Teams/Spring%20%2708/VEG/deliverables/VEG_RiskAssessment.pdf • http://goo.gl/6clVE5

  17. Top 10 Risk IssuesDr. Dieter Fink • 1. Understanding the risk concept • 2. Agreeing on what is project risk • 3. Recognizing risk events • 4. Determining the risk management approach • 5. Determining the risk tolerance • 6. Preparing the risk management plan • 7. Developing organizational risk processes • 8. Estimating risk severity • 9. Preparing the risk breakdown structure • 10. Creating and updating the risk register • Fink, D. (2011). Trends: Key Issues in Project Risk Management. TPM (February/March). Retrieved from http://www.jkr.gov.my/prokom/images/stories/pdf/RM/trends.pdf

  18. 10 Golden Rules of Project Risk Management Bart Jutte • 1. Make risk management part of your project • 2. Identify risks early in your project • 3. Communicate about risks • 4. Consider both threats and opportunities • 5. Clarify ownership of issues • 6. Prioritize risks • 7. Analyze risks • 8. Plan and implement risk responses • 9. Register project risks • 10. Track risks and associated tasks Jutte, B. (2010). 10 golden rules of project risk management . Retrieved from http://www.projectsmart.com/articles/10-golden-rules-of-project-risk-management.php

  19. Intaver InstituteRiskyProject 5 • http://intaver.com/index-tutorial4.html

  20. References • Fink, D. (2011). Trends: Key Issues in Project Risk Management. TPM (February/March). Retrieved from http://www.jkr.gov.my/prokom/images/stories/pdf/RM/trends.pdf • Gjerdrum, D. (2013). The new ERM gold standard: ISO 31000:2009. Retrieved from http://www.riskandinsurance.com/story.jsp?storyId=322335271 • Haughey, D. ( 2013). 21 ways to excel at project management. Retrieved from http://www.projectsmart.com/ • Jutte, B. (2010). 10 golden rules of project risk management . Retrieved from http://www.projectsmart.com/articles/10-golden-rules-of-project-risk- management.php • Kendrick. T. (2009). Identifying and managing project risk. New York: AMACOM. • PMI Global Standard. (2013). A guide to the project management body of knowledge (5th ed.). Newtown Square, Pennsylvania: Project Management Institute, Inc.

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