PMP Exam Prep – Project Risk Management

Project Risk Management

Risk Management is a Principle approach and process to the task of identifying and assessing risks, and the planning and implementing risk responses.

A risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more of the project objectives such as scope, schedule, cost, and quality.

Utility function or Theory is used to measure stakeholder risk tolerance and defines the level or willingness to accept risk.

3 Catagories of utility function

  1. Risk Averse
  2. Risk Neutral
  3. Risk Seeking

Project Risk Management Is the process of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project.

Project Risk Management contains 6 processes

  1. Plan Risk Management
  2. Identify Risks
  3. Perform Qualitative Risk Analysis
  4. Perform Quantitative Risk Analysis
  5. Plan Risk Responses
  6. Control Risks

Plan Risk Management

  • The process of defining how to conduct risk management activities for a project.

Key Inputs

  • Project Management Plan
  • Project Charter
  • Stakeholder Register
  • Enterprise Environmental Factors
  • Organizational Process Assets

Tools and Techniques

  • Planning Meetings
  • Analytical Techniques
  • Expert Judgement

Key Outputs

  • Risk Management Plan

Identify Risks

  • This is when we determine which risks might affect the project and document the characteristics of those risks.

Key Inputs

  • Risk Management Plan
  • Cost Management Plan
  • Schedule Management Plan
  • Organizational Assets
  • Quality Management Plan
  • Scope Baseline
  • Activity Cost Estimates
  • Activity Duration Estimates
  • Stakeholder Register
  • Other inputs (see fig 11-5 of PEMBOK Guide 5th edition)

Tools and Techniques

  • Documentation Reviews
  • Information Gathering Techniques
  • Checklist Analysis
  • Assumptions Analysis
  • Diagramming Techniques
  • SWOT Analysis
  • Expert Judgement

Key Outputs

  • Risk Register
    • A document that details all identified risks, including description, category, cause, the probability of occurring, impact on objectives, proposed responses, owners, and current status.

Perform Qualitative Risk Analysis

  • prioritize risks for further analysis or action by accessing and combining their probability of occurrence and impact.

Key Inputs

  • Risk Management Plan
  • Scope Baseline
  • Risk Register
  • Enterprise environmental Factors
  • Organizational Process Assets

Tools and Techniques

  • Probability and impact assessment
  • Probability and impact Matrix
  • Risk Urgency Assessment
  • Risk Categorization
  • Risk Data Quality Assessment
  • Expert Judgement

Plan Risk Responses

  • The process t develop options and actions to enhance opportunities and to reduce threats to the project objectives

Key Inputs

  • Risk Management Plan
  • Risk Register

Tools and Techniques

  • Strategies for Negative Risks or Threats
  • Strategies for Positive Risks or Opportunities
  • Contingent response strategies
  • Expert Judgement

Key Outputs

  • Project Management Plan Updates
  • Project Documents Updates

Control Risks

  • The process of implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.

Key Inputs

  • Project Management Plan
  • Risk Register
  • Work Performance Data
  • Work Performance Reports

Tools and Techniques

  • Risk Assessment
  • Risk Autids
  • Variance and trend analysis
  • Technical Performance Measurements
  • Reserve Analysis
  • Meetings

Key Outputs

  • Work Performance Information
  • Change Requests
  • Project Management Plan Updates
  • Project Documents Updates
  • Organizational Process Assets Updates
"Material in this blog post are based on the text, Project Management Institute, A Guide to the Project
Management Body of Knowledge (PEMBOK Guide), Fifth Edition, Project Management, Institute, Inc 2013"

"The definitions in this blog post are taken from the Glossarey of the Project Management Institue,
A Guide to the Project Management Body of Knowledge, (PMBOK Guide) - Fifthe Edition,
Project Management Institue, Inc. 2013"

"PMI, PMP, PMBOK are registered marks of the Project Management Institue, Inc"