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the risk report described in . The risk report will be updated to reflect the results ofSection 11.2.3.2 the quantitative risk analysis. This will typically include:

Assessment of overall project risk exposure. Overall project risk is reflected in two key measures:

Chances of project success, indicated by the probability that the project will achieve its key objectives (e.g., required end date or interim milestones, required cost target, etc.) given the identified individual project risks and other sources of uncertainty; and

Degree of inherent variability remaining within the project at the time the analysis was conducted, indicated by the range of possible project outcomes.

Detailed probabilistic analysis of the project. Key outputs from the quantitative risk analysis are presented, such as S-curves, tornado diagrams, and criticality analysis, together with a narrative interpretation of the results. Possible detailed results of a quantitative risk analysis may include:

Amount of contingency reserve needed to provide a specified level of confidence;

Identification of individual project risks or other sources of uncertainty that have the greatest effect on the project critical path; and

Major drivers of overall project risk, with the greatest influence on uncertainty in project outcomes.

Prioritized list of individual project risks. This list includes those individual project risks that pose the greatest threat or present the greatest opportunity to the project, as indicated by sensitivity analysis.

Trends in quantitative risk analysis results. As the analysis is repeated at different times during the project life cycle, trends may become apparent that inform the planning of risk responses.

Recommended risk responses. The risk report may present suggested responses to the level of overall project risk exposure or key individual project risks, based on the results of the quantitative risk analysis. These recommendations will form inputs to the Plan Risk Responses process.

11.5 PLAN RISK RESPONSES

Plan Risk Responses is the process of developing options, selecting strategies, and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks. The key benefit of this process is that it identifies appropriate ways to address overall project risk and individual project risks. This process also allocates resources and inserts activities into project documents and the project management plan as needed. This process is performed throughout the project. The inputs, tools and techniques, and outputs of the process are depicted in . Figure 11-16

depicts the data flow diagram for the process.Figure 11-17

C o p y r i g h t 2 0 1 7 . P r o j e c t M a n a g e m e n t I n s t i t u t e .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Figure 11-16. Plan Risk Responses: Inputs, Tools & Techniques, and Outputs

Figure 11-17. Plan Risk Responses: Data Flow Diagram

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Effective and appropriate risk responses can minimize individual threats, maximize individual opportunities, and reduce overall project risk exposure. Unsuitable risk responses can have the converse effect. Once risks have been identified, analyzed, and prioritized, plans should be developed by the nominated risk owner for addressing every individual project risk the project team considers to be sufficiently important, either because of the threat it poses to the project objectives or the opportunity it offers. The project manager should also consider how to respond appropriately to the current level of overall project risk.

Risk responses should be appropriate for the significance of the risk, cost-effective in meeting the challenge, realistic within the project context, agreed upon by all parties involved, and owned by a responsible person. Selecting the optimal risk response from several options is often required. The strategy or mix of strategies most likely to be effective should be selected for each risk. Structured decision-making techniques may be used to choose the most appropriate response. For large or complex projects, it may be appropriate to use a mathematical optimization model or real options analysis as a basis for a more robust economic analysis of alternative risk response strategies.

Specific actions are developed to implement the agreed-upon risk response strategy, including primary and backup strategies, as necessary. A contingency plan (or fallback plan) can be developed for implementation if the selected strategy turns out not to be fully effective or if an accepted risk occurs. Secondary risks should also be identified. Secondary risks are risks that arise as a direct result of implementing a risk response. A contingency reserve is often allocated for time or cost. If developed, it may include identification of the conditions that trigger its use.

11.5.1 PLAN RISK RESPONSES: INPUTS

11.5.1.1 PROJECT MANAGEMENT PLAN

Described in . Project management plan components include but are not limited to:Section 4.2.3.1

Resource management plan. Described in . The resource management planSection 9.1.3.1 is used to help determine how resources allocated to agreed-upon risk responses will be coordinated with other project resources.

Risk management plan. Described in . Risk management roles andSection 11.1.3.1 responsibilities and risk thresholds are used in this process.

Cost baseline. Described in . The cost baseline has information on theSection 7.3.3.1 contingency fund that is allocated to respond to risks.

11.5.1.2 PROJECT DOCUMENTS

Project documents that can be considered as inputs for this process include but are not limited to:

Lessons learned register. Described in . Lessons learned about effective riskSection 4.4.3.1 responses used in earlier phases of the project are reviewed to determine if similar responses might be useful during the remainder of the project.

Project schedule. Described in . The schedule is used to determine howSection 6.5.3.2 agreed-upon risk responses will be scheduled alongside other project activities.

Project team assignments. Described in . Project team assignments canSection 9.3.3.2 show the resources that can be allocated to agreed-upon risk responses.

Resource calendars. Described in . Resource calendars identify whenSection 9.2.1.2 potential resources are available to be allocated to agreed-upon risk responses.

Risk register. Described in . The risk register contains details of individualSection 11.2.3.1

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project risks that have been identified and prioritized, and for which risk responses are required. The priority level for each risk can help to guide the selection of appropriate risk responses. For example, high-priority threats or opportunities may require priority action and highly proactive response strategies. Threats and opportunities in the low-priority zone may not require proactive management action beyond being placed in the risk register as part of the watch list or adding a contingency reserve.

The risk register identifies the nominated risk owner for each risk. It may also contain preliminary risk responses identified earlier in the Project Risk Management process. The risk register may provide other data on identified risks that can assist in planning risk responses, including root causes, risk triggers and warning signs, risks requiring responses in the near term, and risks where a need for additional analysis has been identified.

Risk report. Described in . The risk report presents the current level ofSection 11.2.3.2 overall risk exposure of the project that will inform selection of the risk response strategy. The risk report may also list individual project risks in priority order and provide additional analysis of the distribution of individual project risks that may inform risk response selection.

Stakeholder register. Described in . The stakeholder register identifiesSection 13.1.3.1 potential owners for risk responses.

11.5.1.3 ENTERPRISE ENVIRONMENTAL FACTORS

The enterprise environmental factors that can influence the Plan Risk Responses process include but are not limited to the risk appetite and thresholds of key stakeholders.

11.5.1.4 ORGANIZATIONAL PROCESS ASSETS

The organizational process assets that can influence the Plan Risk Responses process include but are not limited to:

Templates for the risk management plan, risk register, and risk report;

Historical databases; and

Lessons learned repositories from similar projects.

11.5.2 PLAN RISK RESPONSES: TOOLS AND TECHNIQUES

11.5.2.1 EXPERT JUDGMENT

Described in . Expertise should be considered from individuals or groups withSection 4.1.2.1 specialized knowledge in the following topics:

Threat response strategies,

Opportunity response strategies,

Contingent response strategies, and

Overall project risk response strategies.

Expert input may be sought from individuals with particular subject matter expertise relevant to a specific individual project risk, for example, where specialist technical knowledge is required.

11.5.2.2 DATA GATHERING

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