Risk Management

1. Risk Management
Planning for the unknown

2. What is Risk ?
• Risk is any uncertain event or condition that
might affect your project.
• Not all risks are negative – there are some
opportunities
http://www.radiantminds.co.in

3. How to deal with the risks
• Avoid
• Mitigate
• Transfer (Insurance / Off shoring)
• Accept
http://www.radiantminds.co.in

4. Reactive Strategy
• Don’t worry, I’ll see what to do when it
comes
• I’m always lucky and nothing will happen
• Fire Fighting
• Chaos
http://www.radiantminds.co.in

5. Why RM is necessary ?
• It protects from losses and keeps opportunities
open
• It is always better to strike a balance between
risks & rewards / opportunities
• Different organizations have different tolerances
for risks
http://www.radiantminds.co.in

6. Why RM is necessary ?
• Avoiding risk means getting out of business
• Intelligent thinking makes some people more
confident to take risks
http://www.radiantminds.co.in

7. Risk Types
• Static Risks (Fire, Storm, Accident..)
• Dynamic Risks (Stock Market, Gambling)
where the occurrence is either a loss or a
Profit
• Production Risks
• Marketing & Distribution Risks
• Financial Risks
• Personal Risks
• Environmental Risks
http://www.radiantminds.co.in

8. Risk Break-down Structure
Technical External Organizational
• Quality • Weather • Attrition
• Compatibility • Customer • Priority Change
• Regulations • Funding Cuts
http://www.radiantminds.co.in

9. Risk Management
• Risk is handled by different people in different
ways based on their preference and attitude
towards risk
• Each one has different risk tolerance
• Some people are “Reactive – when risk occurs”
and some “Proactive”
http://www.radiantminds.co.in

10. Risk Management
• Risk Identification
• Risk Analysis – Occurrence, Impact,
Frequency, Timing
• Risk Assessment – Loss on occurrence,
Risk Exposure
• Risk Planning and Resolution – Approach,
Diff. steps
• Risk Monitoring – Impact and implications
• Risk Mitigation – How to meet the
challenges
http://www.radiantminds.co.in

11. Nature of Risks
• Technology Risks – H/w, S/w, Network, Network
Communication
• People Risks – Availability, Capability, Skills,
Maturity,
• Organizational Risks – Customer relations
• Requirement Risks – Clarity, Completeness,
Confirmation
• Estimation Risks – Scope, Reusability
http://www.radiantminds.co.in

12. General Observations
Risk Class Risk %
Technology 5 - 10
People 20
Organization 20
Requirements 60
Estimation 30

13. S/w Risk Management
Identify
Analyze
Plan
Monitor
Resolve
http://www.radiantminds.co.in

14. Risk Identification
• Area where risk can occur
• Type of risk
• Probability
• Severity
• Frequency
• Mitigation
http://www.radiantminds.co.in

15. Risk Analysis
• Requirements • Design
– Stability – Functionality
– Completeness – Difficulty
– Clarity – Interfaces
– Validity – Performance
– Feasibility – Testability
– Scope – H/w constraints
– Non Std. S/w

16. Risk Analysis
• Engg. Spec. • Dev. System
– Maintainability – Capacity
– Reliability – Suitability
– Safety – Usability
– Security – Familiarity
– Feasibility – Deliverability
– Scope • Resources
– Sustainability – Schedule
– Process Control – Staff
– Budget
– Facilities

17. Risk Resolution
• Act on the trigger
• Execute the risk action plan
• Monitor the action plan
• Access the new risk scenario
• Control the risk exposure
Risk Exposure = Probability X Impact
http://www.radiantminds.co.in

18. Expected Monitory Value - EMV
• What is Expected Monitory Value of your risk –
High Winds 35% $48 for
Replacement
Mudslide 5% $750 damage cost
Usable Winds 15% $800 saved as battery
cost
Truck Rental 10% $350 as last minute
Unavailable rental
http://www.radiantminds.co.in

19. EMV
• 35 % X - 48 = - 16.80
• 5% X -750 = - 37.50
• 15% X 800 = + 120.00
• 10% X -350 = - 35.00
• Total EMV - - 30.70
• IF you add 30.70 into the budget then it should
be enough to account for these risks
http://www.radiantminds.co.in