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Running head: PROJECT RISK MANAGEMENT CHAPTER 10, 13, AND 4 1

PROJECT RISK MANAGEMENT CHAPTER 10, 13, AND 4 11

Project Risk Management Chapter 10, 13, and 4

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Chapter 10

Q. 1: Elements

When treating risks, the options are identified then assessed, and finally, a treatment plan is prepared. The options are avoid, reduce, share, or accept the risk. The risks that receive the highest rate are urgently addressed. The options must be proportionate to the risk significance and the treatment cost or benefit. When analyzing the benefit verses cost, the context must also be considered. In choosing the most suitable treatment approach, consult the process owners and relevant stakeholders. The elements in the treatment plan are overview, documentation, and response planning. The overview identifies the agreed upon controls or treatment options. In documentation, a concise and clear risk register showing the people responsible for handling risks is created. The basics of response planning (accepting, avoiding, transferring, and mitigating risks) are used to establish if the risks will either be external or internal. The other requirements on documentation are indicating if the project sponsors will be assigned risk treatments, the person responsible for approving risk management project manager, and targeted resolution date (Jutte, 2012). The team must analyze and at times handle risk. The project sponsors might assist in risk mitigation and the stakeholders may share ideas on how to prevent the risk from turning worse. In response planning, its basics on how to handle risks are covered.

Q 2: Treating risks action

The first action in treating risks is options identification. The options for risks anticipated to have positive result are introducing an activity that may maintain or create this positive result; modify the risk likelihood to increase possible results; attempt to manipulate the effects to increase anticipated gains; share the risk that may contribute by offering more resources which could increase the expected gains probability; or retain the residual risk. For risks with negative outcomes, the options are avoid the risk by postponing, cancelling, or stopping an activity blamed for the risk ; modify the risk probability attempting to eliminate the negative outcomes; sharing the risk with others facing similar risk for example insurance. The second action is developing an action plan. Treatment plans show hoe the selected options will be implemented. the plan should be understanding must offer all the information about proposed actions, resources requirements, roles and responsibilities, performance measures, reporting, and monitoring requirements. The third action is action plan approval. The risk owner must inform and update the management via regular reporting. The fourth action is action plan implementation. The risk plan must show how the risk management is to be carried out in the organization (Jutte, 2012). It must be designed in a manner which will make sure that the risk management is included in all the significant practices and business processes to increases its relevance, efficiency, and effectiveness. The last action is identifying residual risks. This is a risk which remains after identifying the options and implementing the action plans. In addition, it includes risks which were not identified initially and those which were identified but were not treated with other risks.

Q 3: Strategies

In deciding on how likely a risk event can occur, the answers are rare, unlikely, possible, likely, and almost certain. The potential effects if it occurs are catastrophic, major, moderate, minor, and negligible. It is rare that the gas will leak because the container has a tight lid. It is unlikely that the system will be hacked due to a strong firewall. It is possible that the company will soon lay-off more workers because of the continued recording of losses of the last three years. It is likely that the county will be able to control more wild fire eruption after more fire-fighting equipment was purchased. Although it is almost certain that food insecurity will be reported in most states due to the hurricane, the initiated relief program will control the insecurity issue. On the other hand, a first aid treatment is a remedy for minor injury. For a catastrophic impact such as the hurricane, a disaster management program is needed to tackle the problem. For a road prone to accidents, stern measures on offenders of traffic rules can reduce the accident rates. Medical attention is needed to address hygiene in eateries. In a workplace where the risk of the workers fall due to a slippery floor, if the floor is repaired then, chance of the risk occurring is rare.

Q 4: Risk sharing and retention

Risk sharing or transfer means that a risk is transferred to a third party for example, an insurance company to bear a risk. In case of a positive effect, sharing risk means allocation some of the responsibility and ownership to a third party, a reflection of a partnership. To illustrate a positive risk, a multinational company can minimize political and labor risks related to a project by forming a joint venture with a firm situated in the host country. Sharing part of the risk is beneficial when one company has the experience and skills to do something that the other team lacks. Retaining risk is acknowledging that the risk is a significant component of an activity thus; some must be retained due to the activity’s nature. In retaining, the risk is accepted. Acceptance occurs after forming the controls (Jutte, 2012). However, the team plans to tackle it if it occurs. It is significant to take into account the risk level which is acceptable and inherent. Risk sharing is a way of retaining risk. It depends on the risk sharing arrangement success.

Chapter 13

Q. 5: Risks with positive and negative consequences

Positive risks are solved in the same manner as negative risks. The leader works together with the team to create opportunities list which could affect the project. The good things which could occur are brainstormed for example, selling more books than anticipated to request for more orders. After identifying the risk which has a positive effect on the project, imagine how to respond to them. The risk can be responded by exploiting, sharing, or taking no action on the risk. In terms of risk management, project management software is used to record risks and action plans (Jutte, 2012). Moreover, a process owner is delegated the responsibility of overseeing the risks. A date which the risk was first spotted and the follow-up actions are also recorded. The gathered information is used to form the risk log.

Q. 6: Risks identification

Risks can be identified via brainstorming. However, identifying risk with positive consequences is a challenge using structured brainstorming. These risks create opportunities, unlike negative consequences which are viewed as a threat. In a brainstorming session, it is likely that the participants will focus on the threats although the session was for identifying the opportunities (Jutte, 2012). In a marketing campaign which becomes successful than expected, the questions that might be tackled are what if the customer number increases? What if demand increases? Are there logistics to address shipping? The company may for instance, decide to hike the price to minimize demand instead of ordering in bulk and pass the cost savings to the customers and still make a profit.

Q. 7: Mirror-image scales

Risks are categorized basing on the probability and impact. Notably, the strategies of handling positive consequence are mirror-images of the strategies employed to handle negative consequences. Negative risks are accepted if it is of a low probability and low impact. The risk is listed on those that must be monitored. As time goes by, the list must be reviewed to establish if the impact and probability of the risk has risen. Negative risk is a mirror-image of a positive risk. It is the wordings that slightly change. In this scenario, the risk is accepted but is not actively pursued as it would contribute to resources wastage. Instead, it is monitored. The advantage is maximized if it occurs (Jutte, 2012). A high probability and low impact risk is mitigated if it is a negative risk and enhanced if it is positive. A low probability high impact risk is shared irrespective of whether it is negative or positive. If it is a high probability high impact risk it is avoided that is, the requirements can be clarified so that the high-risk scope parts are not included if it is negative. It is exploited if it is positive.

Q. 8: Residual opportunities

Exploiting positive risks means making sure that the positive event takes place for instance, the most skilled employee in a team can be assigned to a task that is demanding to minimize the project duration (Jutte, 2012). The other way of exploiting an opportunity is making decisions that are positive to factor in an opportunity in the scope of project which, in turn, eliminates uncertainty by making sure that the opportunity is included in the project. The other way is conducting the project differently to enable the opportunity to be attained while at the same time meet the project goals for instance, changing technology. If there is an opportunity for bidding for the next project if it is completed before the set date then, the manger can crash the project.

Chapter 4

Q. 9: Risk objectives

The risk management objectives are to identify the uncertainties which are likely to affect a project, assess them to improve understanding, develop and implement actions to stop the risk from occurring or reduce their effect on objectives attainment. The concept purposes to layout the risk mitigation and assessment strategy for those risks. Risk assessment identifies the risk and evaluates its effect. The mitigation plan aims to eliminate, control, or reduce the effect of the risk events. In identification the checklists of potential risks are used then, the probability that the event might occur is evaluated. Some companies design checklists focused on experience from past projects (Hillson, 2011). Identifying the risk sources by category (political, schedule, technical, cost) is another way for finding out the risk. The third way is using the risk breakdown structure. Additionally, the objective of risk management is to gain benefit from spectacular risks.

Q. 10: Risk management steps

The risk management process steps are establishing the context, identification, analysis / evaluation / assessment, risk treatment, implementation, monitor and review. In establishing context, one should first comprehend the context in which risk exists to be able to handle it. The strategic and organizational contexts are considered when establishing the context. The questions asked are what capabilities exist? Is there an internal culture that must be factored in? What regulations must be complied with? Under identification, all the stakeholders should be given a chance to identify risk. It is possible that the stakeholders will accept a project because they are allowed to participate in highlighting things that might hinder a project from running smoothly and the effect if it occurs. The questions to take note of are what can happen? How and why it can happen? What is the likelihood of them occurring? What will be the effects if they occur? In analysis, each risk’s context information is developed. What is the probability of the risk activity occurring? What is the risk activity severity? What is the risk priority? Thereafter, assessment is done with regards to loss severity and occurrence probability. The assessment may be in terms of low, high, and medium. Probability distributions can also be used during the assessment. Under risk treatment, how each risk should be treated is planned. Should the treatment be shared, transferred, avoided, accepted, or mitigated? The low impact, low probability is not treated (Hillson, 2011). The controls of the various risks that were identified are then, implemented. Under monitor and review, new risks are identified as the project progresses. In addition, controls implementations are monitored. Communication and consultation exists in all the steps.

Q 11: Risk analysis and evaluation steps

The first step is identifying the threats such as human, reputation, project, or technical. The second step is estimating the probability of the threats occurrence (Hillson, 2011). To estimate the risk occurring, multiply the estimated event occurring probability by the cost amount to correct things if it occurs (event probability * event cost).

Q. 12: Stakeholder involvement

The stakeholders play a great role in the first step of the risk management process. They identify things that could go wrong and the consequences if they occur. The project manager identifies the people to take part in risk assessment. Stakeholders can also establish whether a communication strategy is needed, select the best media for communication, define the objectives, limits, issue scope. It is not possible for one person to take control of all the information required to identify risks. Selecting various stakeholders who will help ensuring that the information is complete is required. Under monitoring and review, the business owner monitors the risks and review treatment plan effectiveness, the strategies and system in place to control risk (Hillson, 2011). In analysis and evaluation, stakeholders determine the risks that have a great impact compared to others. They also help in identifying the treatment options, assessing them, and in preparing the treatment plans.

Q. 13: Communication

Communication is important in managing projects because each step depends on another’s decision, person or task. The project managers must monitor how the project progresses. The manager assigns tasks, manages resources, reports, and schedules tasks. These tasks require communication. Organizing a meeting at the initial stage of a project also offers the opportunity to establish objectives, discuss problems, ensures that the team knows what is expected of them, the tasks and how they are completed (Hillson, 2011). It results to project success. A project manager also gains trust from the team through communication.

Q. 14: Risk treatment

The purpose of treating risk is to identify the options for treating risks, analyzing those options, prepare the risk treatment plans, and implement those plans. Hence, this step helps to identify the options for controlling risk to eliminate or reduce the negative effects of a negative occurrence. In addition, it aims to foster positive results (Hillson, 2011). The options that one might consider depending on the risk are accepting, reducing, avoiding, transferring, retaining, or financing the risk. It is a step where decisions about how to handle risks are made.

Q. 15: Project risk

A project risk is an event that is uncertain and can affect the project objective either positively or negatively if it occurs. It is related to something new for example, new product development and new technology. Other project risks examples are whether data rates for needed quality of image may surpass capacity, resources needed on a project and what would happen if they suddenly disappeared in the market (Hillson, 2011). One would be require searching for alternative suppliers, ceasing making the product, or training the team to multi-task.

References

Hillson, D. (2011). Managing risk in projects. Farnham, Surrey [u.a.: Gower.

Jutte, B. (2012). Project risk management handbook: The invaluable guide for managing project. New York, N.Y.: Xlibris Corporation.