Risky Business

1. Risky Business Essentials of Risk Management Avneet Mathur (PMP) avneet_mathur@hotmail.com

2. What is a Project? • A project is a temporary endeavor undertaken to produce a unique product or service • Temporary – Definitive beginning and end • Unique – New undertaking, unfamiliar ground Unique Temporary Characteristics of Projects

3. Risk • RISK can be defined as “the threat or probability that an action or event, will adversely or beneficially affect an organization's ability to achieve its objectives”*. • In simple terms risk is ‘Uncertainty of Outcome’, either from pursuing a future positive opportunity, or an existing negative threat in trying to achieve a current objective. * Luhmann 1996:3

4. Issue vs. Risk RISK ISSUE TODAY FUTURE

5. Issue vs. Risk RISK ISSUE If not fixed today, task stops If not identified, may become issue later Issue… already impacting the cost, time or quality Risk… POTENTIAL negative impact to project

6. What’s the Plan? Identification Quantification Response Monitoring and Control

7. Identification • Risk Types • Business (risk to overall business) • Delivery (risk to project delivery) • Technical (specific to particular technology) Vendor not meeting deadline Budget will be exceeded Cause Impact "The vendor not meeting deadline will mean that budget will be exceeded"

8. Quantification Risk Impact Likelihood

9. Quantification LIKELIHOOD IMPACT * Deviation in scope, scheduled end-date or project budget

10. Quantification Priority Score Priority Rating Priority Color ----------------------------------------------------------------------- 0–20 Very Low Black 21–40 Low Green 41–60 Medium Yellow 61–80 High Orange 81–100 Very High Red Priority = [Likelihood + Impact] ------------------------------ 2

11. Response • Address risks rated based on severity . Very-High-rated risks warrant the highest priority, and should be addressed before the less severe classes of risks, and should be tracked until they can be downgraded. • Create a Risk Schedule to address these risks. • In a risk schedule, for every risk identified, preventive actions are listed that are required to reduce the likelihood of the risk occurring, as well as the contingent actions needed to reduce the impact to the project should the risk occur.

12. Monitoring and Control • Continually monitor risks to identify any change in the status, or if they turn into an issue. • Hold regular risk reviews • To identify actions outstanding, risk probability and impact • Remove risks that have passed • Identify new risks

13. Case Study – Buying a Used Car online • Requirements • Buy a car over the internet • Price less than $15,000 • Reliable • Specific make and model • Mileage

14. Case Study – Buying a Used Car online • Sample Risks • Buy a car over the internet • Most people would say don’t! to eliminate the risk, but this is a requirement • Websites that do not have good ratings • Price less than $15,000 • Owner may increase price or add additional cost after finalizing the deal. • Hidden cost • Reliable • Does not need frequent repairs • Does not breakdown • Good brand • Specific make and model • Not getting the same model after finalizing the car • Mileage • Odometer rollback

15. Case Study – Buying a Used Car online • Risk Quantification • Buy a car over the internet • Websites that do not have good ratings • Price less than $15,000 • Owner may increase price or add additional cost after finalizing the deal. • Hidden cost Medium Low

16. Case Study – Buying a Used Car online • Risk Quantification • Reliable • Does not need frequent repairs • Does not breakdown • Good brand • Specific make and model • Not getting the same model after finalizing the car High Medium Medium Low

17. Case Study – Buying a Used Car online • Risk Quantification • Mileage • Odometer rollback High

18. Case Study – Buying a Used Car online • Risk Response

19. Summary • Risk management is a project management tool for handling events that might adversely impact the project, thereby increasing the likelihood of success. • A sound process like this removes the uncertainty and empowers the project manager to complete their project within schedule and within budget. Measure Risk Mitigate Risk Control Risk Control Risk Prioritize Risk Identify Risk Analyze Risk Asses Risk

20. About the Author • Avneet Mathur is a Certified Project Management Professional, as awarded by the Project Management Institute, USA and has been involved in IT for more than a decade. • He holds an MBA in General Business Administration, with an additional Master's Degree in Computer Science and Networking from University of Missouri, Kansas City. He also has a Bachelor's Degree in Computer Science from the Aurangabad University, India. He can be reached at avneet_mathur@hotmail.com

21. About Project Perfect Project Perfect is a project management software consulting and training organisation based in Sydney Australia. Their focus is to provide organisations with the project infrastructure they need to successfully manage projects. Project Perfect sell “Project Administrator” software, which is a tool to assist organisations better manage project risks, issues, budgets, scope, documentation planning and scheduling. They also created a technique for gathering requirements called “Method H”, and sell software to support the technique. For more information on Project tools or Project Management visit www.projectperfect.com.au