The main contents of the chapter consist of the following: Developing the project network, from work package to network, constructing a project network, activity-on-node (AON) fundamentals, network computation process, using the forward and backward pass information, level of detail for activities,. | Managing Risk Chapter 7 Risk Management Process Risk An uncertain event that, if it occurs, has a positive or negative effect on project objectives Risk Management A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a project’s success What can go wrong (risk event) How to minimize the risk event’s impact (consequences) What can be done before an event occurs (anticipation) What to do when an event occurs (contingency plans) The Risk Event Graph FIGURE Risk Management’s Benefits A proactive rather than reactive approach Reduces surprises and negative consequences Prepares the project manager to take advantage of appropriate risks Provides better control over the future Improves chances of reaching project performance objectives within budget and on time The Risk Management Process FIGURE Managing Risk Step 1: Risk Identification Generate a list of possible risks through brainstorming, problem identification and risk . | Managing Risk Chapter 7 Risk Management Process Risk An uncertain event that, if it occurs, has a positive or negative effect on project objectives Risk Management A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a project’s success What can go wrong (risk event) How to minimize the risk event’s impact (consequences) What can be done before an event occurs (anticipation) What to do when an event occurs (contingency plans) The Risk Event Graph FIGURE Risk Management’s Benefits A proactive rather than reactive approach Reduces surprises and negative consequences Prepares the project manager to take advantage of appropriate risks Provides better control over the future Improves chances of reaching project performance objectives within budget and on time The Risk Management Process FIGURE Managing Risk Step 1: Risk Identification Generate a list of possible risks through brainstorming, problem identification and risk profiling. Macro risks first, then specific events Step 2: Risk Assessment Scenario analysis Risk assessment matrix Failure Mode and Effects Analysis (FMEA) Probability analysis Decision trees, NPV, and PERT Semiquantitative scenario analysis Partial Risk Profile for Product Development Project FIGURE Risk Breakdown Structure FIGURE Risk Assessment Form FIGURE Impact Scales FIGURE Risk Severity Matrix FIGURE Managing Risk (cont’d) Step 3: Risk Response Development Mitigating Risk Reducing the likelihood an adverse event will occur Reducing impact of adverse event Transferring Risk Paying a premium to pass the risk to another party Avoiding Risk Changing the project plan to eliminate the risk or condition Sharing Risk Allocating risk to different parties Retaining Risk Making a conscious decision to accept the risk Contingency Planning Contingency Plan An alternative plan that will be used if a possible foreseen risk event actually occurs A plan of actions that will .
