Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall o P.I.I.M.T o American University of Leadership Ahmed Hanane, MBA, Eng, CMA, Partner

Risk Management 07-02

After completing this chapter, students will be able to: Define project risk. Recognize four key stages in project risk management and the steps necessary to manage risk. Understand five primary causes of project risk and four major approaches to risk identification. Recognize four primary risk mitigation strategies. Explain the Project Risk Analysis and Management (PRAM) process

Risk management - the art and science of identifying, analyzing, and responding to risk factors throughout the life of a project and in the best interest of its objectives. Project risk – any possible event that can negatively affect the viability of a project 01-04

Historical Damaging Tsunamis along Japanese Coast (in last 150 years) Name (Magnitude)YearDead or Missing Meiji-Sanriku Earthquake and Tsunami (M8.5)189622,000 Showa-Sanriku Earthquake and Tsunami (M8.1)19333,064 Tonankai Earthquake (M7.9)19441,251 1) Nankai Earthquake (M8.0)19461,443 1) Chile Earthquake (Mw9.5) 2) Tokachi-Oki Earthquake (M7.9) ) Nihonkai-Cyubu Earthquake (M7.7) ) Hokkaido-Nansei-oki Earthquake (M7.8) ) 1) The number includes dead or missing from earthquakes. 2) Tsunami generated at far off Japanese coast. 8

Communication & Transmission of Tsunami Warning to Localities & Civil Defense Authorities Signboard Tsunami TSUNAMI ＷＡＲＮＩ ＮＧ Central Government ＴＶ /Radio Station TSUNAMI ＷＡＲＮＩ ＮＧ Radio TV （ Telops, Warning maps ） TSUNAMI ＷＡＲＮＩ ＮＧ Local government 13

Safe Evacuation Route Appropriate Risk Awaweness of Local Communities Promoting Basic Knowledge about “TSUNAMI” Disaster Understanding of Hazardous Areas + Early Warning = Safe Evacuation 16

Tsunami Hazard AreaTsunami Evacuation AreaTsunami Evacuation Building Pictogram on Tsunami There is a high possibility to be flooded in this area when earthquake occurs. Safe place/hill for evacuation against Tsunami. Building for evacuation against Tsunami. 21

07-09 Figure 7.2

o What is likely to happen? o What can be done? o What are the warning signs? o What are the likely outcomes? Project Risk = (Probability of Event)(Consequences of Event)

1. Risk identification 2. Analysis of probability and consequences 3. Risk mitigation strategies 4. Control and documentation

 Financial  Technical  Contractual/Legal  Commercial  Execution Common Types Absenteeism Resignation Staff pulled away Time overruns Skills unavailable Ineffective Training Specs incomplete Change orders

 Brainstorming meetings  Expert opinion  Past history  Multiple (or team based) assessments

07-14

1. Identify factors and assess the probability (P f ) and consequences (C f ) of failure 2. Calculate overall probability & consequence 3. Calculate overall risk factor Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 07-15

o Accept o Minimize o Share o Transfer o Contingency Reserves o Task contingency o Managerial contingency o Mentoring o Cross training 07-16

Help managers classify and codify risks, responses, and outcomes Change management report system answers o What? o Who? o When? o Why? o How? 07-17

FIGURE 7.6 Contingency Document for Adjustments to Project Plan Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Extends risk management over project’s life cycle Key Features of PRAM  Risk management follows a life cycle  Risk management strategy changes over the project life cycle  Synthesized, coherent approach 07-19

1.Define 2.Focus 3.Identify 4.Structure 5.Clarify ownership of risks 6.Estimate 7.Evaluate 8.Plan 9.Manage 07-20

1. Define project risk. 2. Recognize four key stages in project risk management and the steps necessary to manage risk. 3. Understand five primary causes of project risk and four major approaches to risk identification. 4. Recognize four primary risk mitigation strategies. 5. Explain the Project Risk Analysis and Management (PRAM) process