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Chap 11.5 Plan Risk Response

https://www.slideshare.net/anandbobade/chap-110-project-risk-management-overview-143496876
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Chap 11.5 Plan Risk Response

  1. 1. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Chapter 11 – Project Risk Management PMP Trainer: Anand BobadePMBOK 6th Edition, 2019, All rights reserved. Plan Risk Response SIXTH EDITION
  2. 2. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 11.5 Plan Risk Responses Plan Risk Responses - Definition Plan Risk Responses : ITTO Strategies for Negative Risks or Threats Strategies for positive risks or opportunities Contingent Response Strategies Risk Trigger Review
  3. 3. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  4. 4. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Developing options & actions to enhance opportunities & reduce threats to project objectives. It addresses risks by their priority by updating budget, schedule & PMP. Plan Risk Responses -> Definition
  5. 5. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Plan Risk Response -> ITTO Expert Judgment Data Gathering Interpersonal and team skills Strategies for Threats Strategies for Opportunities Contingent Response Strategies Strategies for overall project risk Data analysis Decision making Project Management Plan Project documents Enterprise environmental factors Organizational process assets Change request Project document updates PMP updates Inputs Tools & Techniques Outputs
  6. 6. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project Management Plan Project documents Enterprise environmental factors Organizational process assets Plan Risk Responses->Inputs
  7. 7. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project Management Plan Plan Risk Responses->Inputs Resource Management plan Risk Management plan Cost Baseline
  8. 8. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project documents Plan Risk Responses->Inputs Lessons learned register Project Schedule Project team assignments Resource calendars Risk Register Risk Report Stakeholder Register
  9. 9. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Expert Judgment Data Gathering Interpersonal and team skills Strategies for Threats Strategies for Opportunities Contingent Response Strategies Strategies for overall project risk Data analysis Decision making Plan Risk Responses->T&T
  10. 10. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Expert Judgment Plan Risk Responses ->T&T->Expert Judgement Expertise from individuals or groups with expertise in the risk response planning Threat and opportunity response strategies Contingent response strategies Overall project risk response strategies Alternative risk response strategies
  11. 11. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Data Gathering Interviews • Experience & Historical data. • Expertise in developing risk responses • Knowledge about specific individual project risks Plan Risk Responses ->T&T->Data Gathering
  12. 12. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Negative Risks or Threats It helps to manage Negative impact on Project Objectives: Plan Risk Responses->T&T->Strategies for NR or Threats Escalate Mitigate Transfer Avoid Accept Strategy to manage each Risk should be unique It should match Risk’s probability & overall impact on the project objectives
  13. 13. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Negative Risks or Threats Escalate: • A threat which is outside the scope or the proposed response would exceed the project manager’s authority • then escalate to the Program or Portfolio level with the agreement from the project team and sponsor Mitigate: • Reduce impact or probability of risk to an acceptable threshold. • Take early actions to reduce impact/probability. Transfer: • Shift responsibility of risk consequence to another party. • Does NOT eliminate risk. • Effective in dealing with financial exposure. Avoid: • Eliminate a risk by avoiding cause/source of risk Generally done by changing PMP. • PM may isolate of change Project objective. • Protect project from impact of risk. Accept: • Risk is acknowledged. • No action taken unless Risk occurs. • Used when its not possible or cost effective to address risks. Plan Risk Responses->T&T->Strategies for NR or Threats
  14. 14. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Negative Risks or Threats Mitigate: • Reduce impact or probability of risk to an acceptable threshold. • Take early actions to reduce impact/probability. Plan Risk Responses->T&T->Strategies for NR or Threats When it is not possible to reduce probability, mitigation should consider mitigating impact. E.g., Designing redundancy in system will reduce impact from failure of the original component. Examples: Project Staging Adapting less complex process. More testing Prototyping Redundancy planning Use more qualified resources/Supplier
  15. 15. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Negative Risks or Threats Transfer: • Shift responsibility of risk consequence to another party. Does NOT eliminate risk. • Effective in dealing with financial exposure. Buy/subcontract: move liabilities Insurance: liabilities + bonds + Warranties Selecting Procurement contracts to transfer Risks: • Risk transferred to sellerFixed Price contract: • Risk transferred to BuyerCost plus contract: Plan Risk Responses->T&T->Strategies for NR or Threats
  16. 16. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Negative Risks or Threats Avoid: • Eliminate a risk by avoiding cause/source of risk • Generally done by changing PMP. • PM may isolate of change Project objective. • Protect project from impact of risk. Changing implementation strategy. In-house development (no subcontracting). Reduce scope to avoid high risk deliverables. Clarify requirement. Improve communication. Acquiring expertise. Radical avoidance strategy: Shut down project. Plan Risk Responses->T&T->Strategies for NR or Threats Examples:
  17. 17. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Examples: Strategies for Negative Risks or Threats Accept: • Risk is acknowledged. • No action taken unless Risk occurs. • Used when its not possible or cost effective to address risks. • Develop a contingency plan to execute if the risk occur. Active Acceptance • Deal with the risks as they occur (No Plan B prepared) Passive Acceptance Commonly used strategy - Contingency reserve. Established reserve for time, money or resources. Plan Risk Responses->T&T->Strategies for NR or Threats
  18. 18. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Positive Risk or Opportunities Seek ways to make positive risks or opportunities more likely to occur: Plan Risk Responses->T&T->Strategies for PR or Opportunities Escalate Exploit Enhance Share Accept
  19. 19. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Positive Risk or Opportunities Exploit: • Ensure opportunity is realized. • You do not try, but work hard & ensure opportunity is 100% realized. Example: Using new technology may result in saving 50% of the development leading organization to complete another initiative. To exploit: Staff will be trained on technology & relevant technology expert will be hired. Plan Risk Responses->T&T->Strategies for PR or Opportunities Using organizations most talented resources for faster delivery. Technology upgrade.
  20. 20. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Positive Risk or Opportunities Enhance • Increase chances of opportunity occurring. • Take proactive action to enhance opportunity. Example: Using new technology may result in saving 50% of the development leading organization to complete another initiative. To Enhance: PM will monitor work closely, Compress schedule by adding resources & doing parallel work etc. Plan Risk Responses->T&T->Strategies for PR or Opportunities
  21. 21. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Positive Risk or Opportunities Share: • Not capable of realizing opportunity on your own. • Work with other parties to share Benefits Example: Lack of technical capability is not allowing you to bid for a contract, and you want to realize this opportunity. To share: You will team up with other company expert in technology to apply for contract. Plan Risk Responses->T&T->Strategies for PR or Opportunities Risk sharing Partnership. Special purpose companies. Joint Venture.
  22. 22. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for Positive Risk or Opportunities Accept • Willing to take advantage of opportunity if it comes, but not actively pursuing it. Plan Risk Responses->T&T->Strategies for PR or Opportunities
  23. 23. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Contingent Response Strategies Reponses plans to the Risk occurrence. Plan that deals with events when it occurs. This is Risk response plan. Contingency plans Plan that gets Implemented when the contingency plan fails or is not fully effective. Fall back plans: Plan Risk Responses->T&T->Contingent Response Strategies
  24. 24. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Contingent Response Strategies Contingency plans: • Plan that deals with events that may or may not occur. Construction project Risk: There is a risk that rain may fall, which will damage your materials lying in the open. Plan: If there is an indication of rain, all materials will be covered with a plastic sheet. Also, after rain, you will bring a blower/vacuum pump to clean & dry wet materials. Plan Risk Responses->T&T->Contingent Response Strategies
  25. 25. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Contingent Response Strategies Fallback plan: • Plan that gets Implemented when contingency plan fails or not effective. Construction project Risk: • There is a risk that rain may fall, which will damage your materials lying in the open. Suppose rain continued for a long time than anticipated, leading material to be useless. Plan B: • If material is useless, you will reorder them from a pre-identified supplier & start the work immediately. Plan Risk Responses->T&T->Contingent Response Strat.
  26. 26. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Contingent Response Strategies Risk triggers: • Indications that a risk has occurred or is about to occur. • Also called as warning signs/risk symptoms • Engage your Legal team to monitor the status of this regulation. • Inform PM if change happens. Risk: Change in government regulation • Establish monitoring mechanism for CPU & disk usage. • Inform PM if limit is reached. Risk: Server capacity is insufficient to meet peak demand Plan Risk Responses->T&T->Contingent Response Strategies Events that trigger the response should be documented & tracked.
  27. 27. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Contingent Response Strategies Assigned the responsibility of ensuring that risk response is effective. Also, he may Plan additional risk response if required Risk Owner Risk owner depute a risk action owner in very large project where it will be difficult for risk owner to manage all risk on its own. Risk Action Owner Plan Risk Responses->T&T->Contingent Response Strat.
  28. 28. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Strategies for overall project risk Avoid Exploit Transfer/Share Mitigate/Enhance Accept • involves taking focused action (bring back within the threshold) to reduce the significantly negative project risk which is outside the agreed upon risk threshold Avoid • involves taking focused action to capture the significantly positive project risk which is outside the agree upon risk threshold Exploit • Involve a third party, f the organization is unable to address the overall project risk effectively. Transfer / Share • Involve changing the level of overall project risk Mitigate / Enhance • Even if the overall project risk is outside the agreed-upon threshold, no proactive response strategy is developed & project chose to continue as is. Accept Plan Risk Responses->T&T -> Strategies for overall project risk
  29. 29. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Data analysis Alternatives analysis Cost-benefit analysis Cost effectiveness of a response strategy = change in impact level / implementation cost Higher the change in impact level, more the effectiveness For opportunities this level should increase For threats this level should decrease Plan Risk Responses->T&T -> Data analysis
  30. 30. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Change request Project document updates PMP updates Plan Risk Responses->Outputs
  31. 31. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) PMP updates Plan Risk Responses->Outputs Schedule Management plan Cost Management Plan Quality Management Plan Resource management Plan Procurement Plan Schedule baseline Scope Baseline Cost Baseline
  32. 32. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) PMP updates Scope Baseline: New modified or omitted work Schedule baseline: Because of scope change schedule may change. Cost Baseline: Because of scope & schedule change. Schedule MP: changes in tolerances or behaviour related to resource levelling & loading. Cost MP: changes in tolerances or behaviour related to cost accounting, tracking & reports. Quality MP: changes in tolerances or behaviour related to requirements, quality assurance & control. HR MP: Changes in tolerances or behaviour related to staff allocation. Procurement MP: Changes to procurement strategy. Plan Risk Responses->Outputs->PMP update Plans are updated to Reflect changes in process & practice.
  33. 33. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project document updates Assumption log Cost Forecasts Lessons learned register Project Schedule Project team assignments Risk Register Risk Report Plan Risk Responses->Outputs
  34. 34. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project document updates Risk Register Assumptions log updates Technical Documentation Updates Change Requests Project document Updates Plan Risk Responses->Outputs->Proj. doc. updates Risk Register Updates: Risk Owner & responsibiliti es Agreed Response strategy Budge & schedule activities Trigger conditions Residual Risks Secondary Risks Contingency plans & Triggers Contingency reserves
  35. 35. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Plan Risk Responses - Definition Plan Risk Responses : ITTO Strategies for Negative Risks or Threats Strategies for positive risks or opportunities Contingent Response Strategies Risk Trigger Plan Risk Responses -> Review

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