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ISE515: Team 5: Risk Management

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David McFarland

on 13 August 2013

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Transcript of ISE515: Team 5: Risk Management

What is Risk Identification?
Risk identification is the

process of determining risks

that could potentially prevent the program, enterprise, or investment from achieving its objectives. It includes documenting and communicating the concern.
Types of Risk
Technical Performance
Field Support
Investor Relations

Develop controls
& Make decisions

Risk Management
- An uncertain event or condition that, if it occurs, has a positive or negative effect on a project's objectives
- Response to risk
- a provision to mitigate cost and/or schedule Risk to provide further detail on what types of risk are meant to be mitigated

ISE 515: Engineering Project Management
Project Management, A Managerial Approach, 6th Edition by Jack R. Meredith and Samuel J. Mantel Jr. Publisher: John Wiley & Sons; ISBN: 13978-0471-715375.

Take Away Points

Prepared by: Team#5 and members
Brendan McCay
Heejin Mia Lee
David McFarland
Elnaz Nouri
Nicole Hirao

Risk Management



Supervise and

The determination of
quantitative or qualitative value of risk
related to a concrete situation and a recognized threat/hazard
Is risk a bad thing? Can it be avoided? Can it be mitigated?
Is risk management one time event?
Will risks stay the same once we define them? increase? decrease?
How can we assess them and how can we use it?
How do we know if the risk is under control?
Risk Management
identification, assessment, and prioritization
of risks (defined in ISO 31000 as the
effect of uncertainty on objectives
, whether positive or negative) followed by coordinated and economical application of resources to
minimize, monitor, and control the probability and/or impact of unfortunate events
or to maximize the realization of opportunities.

Allow time/space for workers to communicate risks
Make clear who is responsible for what risk
Assign a risk owner for each risk that you have found
Prioritize Risks

Risks are already mapped, prioritized and understood.
Create risk response plan that focuses on the big wins.
Avoid Risk
Organize your project in such a way that you don't encounter a risk anymore
Unlikely to do without effecting the scope
Reduce Risk
Influencing the causes or decreasing the negative effects that could result
Retain Risk
Good choice if the effects on the project are minimal or the possibilities to influence it prove to be very difficult, time consuming or relatively expensive
Transfer risk
Move the risk to another party (e.g. insurance)
Share Risk
Work and risk put partially on other parties by collaberation
Probability of Occurrence
Severity of Impact
Risk Assessment
- Cost
- Time
- Scope
- Quality
How do we MEASURE it?

Identify as many risks as possible
What can go wrong
Minimize their impact
What can be done before the project begins
Manage responses to risks that do materialize
Contingency plans
Provide contingency funds to cover risk events that actually materialize
Remember that effective communication is key

Risk Identification Techniques
Event inventories and event loss data
Interviews and self-assessment
Facilitated workshops
SWOT analysis
Risk questionnaires and surveys
Scenario analysis
Using technology
Parametric models
Experts and standard
Prior projects (history)

There are multiple sources for risk. Some factors that should be considered are:
Cost estimates
Technical maturity
Key performance parameters
Performance challenges
Stakeholder expectations vs. current plan
External and internal dependencies
Implementation challenges
Risk Supervision
This is about bookkeeping of the risks.
Maintaining a risk log:
enables you to view progress and make sure no risks are forgotten.

is a perfect
communication tool
informing your team members and stakeholders what is going on.
Risk Evaluation
Determination of risk management priorities through establishment of qualitative and quantitative relationships between benefits and associated risks. [5]
Ranking identified risks by considering the consequence and probability of them.
How to evaluate?
-intensity(high,medium,low )
-scope of potential impact
Risk maps[1]:
Evaluation Tools
Risk evaluation allows you to:

1. determine the significance of risks
2. decide to accept a specific risk or take action to prevent or minimize it.[4]
1. Either eliminates, substitutes or reduces the risks as early as possible.[2]

2. Addresses these questions based on risk assessment step:
How severe is the risk?
How immediate is the risk?
Who does it affect?
How easily could it be controlled?
What other benefits would there be from controlling the risk?
A good risk control plan
Why Risk Management is Important
Case study: Runaway Lorrie
https://www.youtube.com/watch?v=icN40I3JJLYRVAsec 2013: Alex Hutton; 27:20 to 29:08
Learning Objectives
Keys to Risk Management
What can go wrong?
What can be done before the project begins?
Provide contingency plan and funds
3 Risk Response Options

-Interviewing expert or consultant
-Risk analysis charts
-Sensitivity analysis
-Decision tree analysis
Risk control plan helps with controlling the risks.
short term(weeks)
medium term(months)
long term (years)
Risk control plan includes what you will do:
Planning includes the result of " Risk Assessment" step:

High risk plan
Medium risk plan
Low risk plan

We need to make sure
All levels are trained for proper risk control execution
Controls are converted into clear, simple execution orders understood at all levels
Everyone involved knows that risk contingencies are being executed when an order is issued

Options for Dealing with Risk
Each contingency plan should contain a trigger point to determine when the contingency plan should be implemented
Exercise: Finals studying
[1] Harrison, Frederick L., and Dennis Lock. Advanced project management: a structured approach. Gower Publishing, Ltd., 2004.
[2] Kerzner, Harold R. Project management: a systems approach to planning, scheduling, and
controlling. Wiley, 2013.
[3] Kreidler, Erich. ISE 515 Risk Management Class Presentation, 2013.
[4] Meredith, Jack R., and Samuel J. Mantel Jr. Project management: a managerial approach. Wiley. com, 2011.
[5] Mobey, Alison, and David Parker. "Risk evaluation and its importance to project implementation." Work Study 51, no. 4 (2002): 202-208.
[6] Jutte, Bart. "10 Golden Rules of Project Risk Management." 10 Golden Rules of Project Risk Management. N.p., n.d. Web. 12 Aug. 2013.
[7] Shenkir, William G. and Walker, Paul L.. Enterprise Risk Management: Tools and Techniques for Effective Implementation. Institute of Management Accountants
[8] Daw, Catherine. Project Management Series: Risk Management – A Key Ingredient to Project Success. SPM Learning Ltd
[9] Tripple Bottom Line. Risk Management Group. Risk Pentagon

Risk Maps
They show:
1. significance and likelihood of the risks occurring.
2. Rating of each risk is on a scale of one to ten.
3. Visualization of the risks relation to each other
4. Plan of what type of controls should be implemented
Risk Management is
Constant and Cyclical.
Every project will have risks...
Start Here
End Here
Start Here
End Here
Images and Videos
[1] Spurlock, Morgan. The greatest TED Talk ever sold. TED
[2] Hutton, Alex. Towards A Modern Approach To Risk Management. RVAsec
[3] QBE Europe; https://www.youtube.com/user/QBEEO?feature=watch
[4] riskmanagement. "Risk Management: Learning by Example." Secure360. N.p., n.d. Web. 12 Aug. 2013.

How do we determine this?
Full transcript