To help me to study for the Risk Management Exam, I studied two books, which included the Risk Management section of the PMBoK guide and a study guide for the PMI-Risk Management Professional certification. While reading each of these books, I took notes, ready for me to have a single source to revise (or prompt) my study from.
The first section was to write down and reinforce my understanding of the phases.
1. Plan Risk Management
2. Identify Risks
3. Perform Qualitative Risk Analysis
4. Perform Quantitave Risk Analysis
5. Plan Risk Responses
6. Monitor and Control Risks
The next section was to capture a series of keywords from all of the processes, so that I had a single reference. The notes below are my notes and are written in note form. I hope they help.
- Risks always happen in future. Risk is uncertainty. Risk that occurred = ISSUE
- Risk is an uncertain event or condition that, if occurs, has an effect on at least one project objective. May have one or more cause, which may have one or more impacts
- Cause maybe a requirement, assumption, constraint or condition that creates possibility of positive or negative outcomes
- Risk Event maybe that something takes longer than expected or positive that we can still complete on time, if no extra resource
- Risk condition include aspect of project/org env; immature PM practices
- Known - Id and analyzed and plan responses; Unknown cannot be planned - contingency
- Risk tolerance - org / project accept varying degree of risk
- Risks that are threat could be accepted within tolerance
- Risk Audit – Examine and document effectiveness of risk responses
- Cause and effect digs - Ishikawa or fish bone - identify cause of risk
- SWOT - Strength, weaknesses, opportunities, threats) - start on strength and weak, identify ops from strengths and treats from weak
- Projects using state-of-the-art or first-kind tech, and highly complex proj have more uncertainty
- Risk Probability is likelihood / Risk Impact is potential effect on project obj
- Risk Probability & Impact rated according to definition in RMP. Low on Watch list
- Negative = threat / Positive = Opportunity
- Strategy for negative risks (ATMA – Avoid, Transfer, Mitigate, Accept)
- Strategy for Positive Risks (ESEA – Exploit, Share, Enhance, Accept)
- Workaround (unplanned for unidentified or accepted risks)
- Residual Risks: Residual Risks are those risks that expected to remain after planned responses of risks have been taken, as well as those that have been deliberately accepted.
- Secondary Risks: Secondary Risks are those risks that arise as a direct outcome of implementing a risk response.
- Contingency Reserve is the cost, or time reserve that is used to manage the identified risks or “known-unknowns” (known=identified, unknowns=risks).
- Management Reserve is the cost, or time reserve that is used to manage unidentified risks or “unknown-unknowns” (unknown=unknown, unknowns=risks).
- Contingency Plan describes the various specific actions that will be taken if the risk occurs and these actions are carried out at the time of risk occurrence.
- Fallback Plan is a next step plan for Contingency Plan, it is implemented when Contingency Plan fails, or not fully effective (in other words we can say that Fallback Plan generally made for Residual Risks).
- P&I Matrix - risk rating rules are org process asset. Each risk importance to priority to low (mid-g)/ mod (light-g) / high (dark-g).
- 3 point estimates (high/pessimistic, low/optimistic)
- Probability distribution - continuous prob dist used in modeling and simulation to represent costs/schedule. Discrete dist represent uncertain events.
- Sensitivity analysis determines which R have most potential impact on project.
- Tornado dig - compare important and impact of variables with high degree of uncertainty
- EMV (Expected Monetary Value) - statistical concept that calcs the average outcome when future may or may not happen (Analysis under uncertainty). Calc by multiplying each possible outcome by probability of occurrence and adding products together. Common use in decision tree analysis.
- Monte Carlo technique - iterative simulations. Generate RND no, helps reduce uncertainty, uses probability distribution
- Probabilistic analysis of the project - estimate of project schedule / cost listing possible completion dates / cost with confidence level.
- Trends in Quantative R Analysis - analysis repeated, a trend may become apparent.
- Contracts – Fixed Price – Risk on seller. Cost Reimbursement – Cost + profit -> more on buyer. Time and Mat.
- Contingency Response Strategy – Plan of action if Risk occurs – Requires some warning
- Contingency Vs Fall Back
- Variance Analysis – Difference between planned result to actual result
- Trend Analysis – Trends in project execution
- Delphi - anonymous consensus of experts to reduce bias and one person having undue influence
I have not included the formula in this article, as this will follow in the next. I hope this proves useful.