1. P.I.I.M.T American University of Leadership
Ahmed Hanane, MBA, Eng, CMA, Partner

2. Chapter 7
Risk Management

3. Chapter 7 Learning Objectives
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.

4. Risk
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

5. Historical Damaging Tsunamis along Japanese Coast (in last 150 years)
Name (Magnitude)
Year
Dead or Missing
Meiji-Sanriku Earthquake and Tsunami (M8.5)
1896
22,000
Showa-Sanriku Earthquake and Tsunami (M8.1)
1933
3,064
Tonankai Earthquake (M7.9)
1944
1,251 1)
Nankai Earthquake (M8.0)
1946
1,443 1)
Chile Earthquake (Mw9.5) 2)
1960
142
Tokachi-Oki Earthquake (M7.9)
1968
52 1)
Nihonkai-Cyubu Earthquake (M7.7)
1983
104 1)
Hokkaido-Nansei-oki Earthquake (M7.8)
1993
230 1)
1) The number includes dead or missing from earthquakes.
2) Tsunami generated at far off Japanese coast. 8

6. Tsunami Warning System Elements
Communication & Transmission of Tsunami Warning
to Localities & Civil Defense Authorities
Signboard
Tsunami
TSUNAMI
ＷＡＲＮＩＮＧ
Local government
Central Government
TSUNAMI
ＷＡＲＮＩＮＧ
Radio
TSUNAMI
ＷＡＲＮＩＮＧ
ＴＶ/Radio Station
TV（Telops, Warning maps） 13

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

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

9. Risk versus Amount at Stake: Challenge in Risk Management
Figure 7.2

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

11. Four Stages of Risk Management
Risk identification
Analysis of probability and consequences
Risk mitigation strategies
Control and documentation

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

13. Risk Factor Identification
Brainstorming meetings
Expert opinion
Past history
Multiple (or team based) assessments

14. Risk Impact Matrix

15. Project Risk Scoring
Identify factors and assess the probability (Pf ) and consequences (Cf) of failure
Calculate overall probability & consequence
Calculate overall risk factor
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

16. Risk Mitigation Strategies
Accept
Minimize
Share
Transfer
Contingency Reserves
Task contingency
Managerial contingency
Mentoring
Cross training

17. Control & Documentation
Help managers classify and codify risks, responses, and outcomes
Change management report system answers
What?
Who?
When?
Why?
How?

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

19. Project Risk Analysis & Management
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

20. Nine Phases of Risk Assessment
Define
Focus
Identify
Structure
Clarify ownership of risks
Estimate
Evaluate
Plan
Manage

21. Summary 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.