Chap 11.1 Plan Risk Management

By: Anand Bobade (nmbobade@gmail.com)
Chapter 11 –
Project Risk Management
PMP
Trainer: Anand BobadePMBOK 6th Edition, 2019, All rights reserved.
Plan Risk
management
SIXTH EDITION

PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Plan Risk Management
Plan Risk Management - Definition
Why Risk management planning is important?
Plan Risk Management Processes: ITTO
What Risk Management Plan contains?
The Risk Breakdown Structure
Review

Project Risk Management Processes
Plan Risk
management
Identify Risk
Perform Qualitative
Risk Analysis
Perform Quantitative
Risk Analysis
Plan Risk Response Implement Risk Monitor Risk
P
MC
P P P
P E

The process of defining how to conduct risk
management activities for a project.
Ensures the degree, type & visibility of risk
management commensurate with risks &
importance of project.
Plan Risk Management -> Definition

Risk Management helps by
• Reduce crisis management.
• Minimize project surprises.
• Anticipate problems thereby making you proactive than
reactive.
• Increase likelihood of project success.
• Enhance your company’s competitive position.
• Become a better manager.
Plan Risk Management -> Why to plan?

By: Anand Bobade (nmbobade@gmail.com)By: Anand Bobade (nmbobade@gmail.com)
Plan Risk Management->ITTO
Expert Judgment
Data analysis
Meetings
Project Charter
Project Management
Plan
Project documents
EEF
OPA
Risk Management plan
Inputs Tools & Techniques Outputs

Project Charter
Project Management
Plan
Project documents
Plan Risk Management-> Input
Enterprise
environmental factors
Organizational
process assets

Project Charter
Project authorization document with high level details.
Plan Risk Management-> Input->Project Charter
High Level inputs
Initial risks Project Objective Project Requirements

Project
Management Plan
All approved subsidiary plans & baselines.
PMP
All Baselines
Scope Baseline
Cost Baseline
Schedule
baseline
Cost Manag.
Plan
Schedule
Manag. Plan
Communication
Manag. plan
Plan Risk Management-> Input->PMP

Enterprise
Risk Attitude:
Risk Averse:
• Not comfortable with digesting risks. Not supportive
towards risks.
Risk Seeker:
• likes to seek risks if they see any opportunity. Young
startup/dynamic companies
Risk Neutral
• Are neutral to risks. They deal with risks objectively. Use
EMV & decision tree analysis to analyse risk.
Risk Tolerant
• Very comfortable with ignoring risks. They don’t care and
never pay any attention to a risk until it becomes an issue.
Plan Risk Management-> Input->EEF

Risk Attitude will drive:
Risk Appetite Risk Tolerance Risk Threshold
Risk Appetite:
Degree of uncertainty an organization is willing to
take on in anticipation of a reward.
E.g., High, medium, low etc
Risk Tolerance:
Degree, amount, or volume of the risk that an
organization or individual will withstand. E.g., Allow
schedule slippage by 5–10% or cost slippage by 7–
15%.
Risk threshold:
Amount of risk that an organisation is willing to
accept. is the limit beyond which your organization
will not tolerate the risk. E.g., For a project cost
overrun is allowed till 100,000.
Enterprise

Risk Appetite: Risk Tolerance: Risk threshold:
Qualitative Quantitative Quantitative
•Organization has high level of Risk appetite.
Risk
Appetite:
•You are bidding for a project. The estimated cost of this project is approximately 1Million.
•You are in the process of applying for this bid, however, your management constraints you by
stating that you can not bid more than 10% of this amount. This 10% is your tolerance limit.
Risk
Tolerance:
•You are bidding for a project. The estimated cost of this project is approximately 5 Million.
•You are in the process of applying for this bid, however, your management constraints you by
stating that you can not go beyond additional 100,000 of this amount. This 100,000 is your
threshold.
Risk
threshold:

Organizational
process assets
OPA related to Risks:
Organizational risk policy
Common Definitions & terms
Risk statement format
Templates & Risk Categories
Roles & responsibilities
Decision making authority levels
Lesson learned
Plan Risk Management-> Input->OPA

Meetings Expert Judgment Data analysis
Plan Risk Management-> T&T

Expert Judgment
Expertize should be considered from groups or individuals with specialized
knowledge in the area of Risk management.
Senior Management Project Stakeholders
PM with similar
project experience
Subject Matter
expert
Consultants
Professional &
technical associates
Plan Risk Management->T&T->Expert Judgement
Help PM to setup
risk management
context
Analyses
organizations
risk attitude.

Data analysis
Stakeholderanalysistodeterminetheriskappetiteofprojectstakeholders
Plan Risk Management->T&T->Analytical Technique
Stakeholder analsyis

Meetings
Anyone responsible for risk management will be part of the meetings:
Project Manager Sponsor
Selected team
members
Selected
stakeholders
Plan Risk Management->T&T->Meetings
Define high level plans for
conducting risk management.
Review Risk contingency
reserve & assign responsibility.
Analyse templates, categories
& tailor it.

Plan Risk Management->Output
Risk Management
plan

RMP includes:
Strategy (approach)(How?)
Roles & Responsibilities (who?)
Budgeting (Cost of Risk management)
Timing (Schedule)
Risk Categories (RBS)
Probability & Impact
Stakeholder Tolerances
Reporting Format
Tracking (Follow-up)
Plan Risk Management->Output->Risk Management Plan
Risk Management
plan

Risk Management
plan
RBS for IT
project
Business
Business
process
Market changes
Change in
management
Technical
Hardware
Software
Network
Project
Management
Estimation
Planning
Resource
Communication
Plan Risk Manag.->Output->Risk Management Plan

How much efforts need to be spent on risk
management.
How risk management helps on project?
Risk Attitude(Risk averse, Risk Seeker, Risk Neutral &
Risk tolerant)
What Risk Management Plan contains?
The Risk Breakdown Structure
Plan Risk Management-> Review

By: Anand Bobade (nmbobade@gmail.com)

Chap 11.1 Plan Risk Management

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Chap 11.1 Plan Risk Management