Question

List five Risk identification methods

Explain three of the listed techniques(methods) as they are used.

Explain four basic types of Risk response

Give examples of one each that can be used for negative Risk and Positive Risks

Answer 1

ANS. Five identification methods to identify risks are as follows:-

1.Interviewing

An interview is conducted with project participants, stakeholders, experts, etc to identify risks.

2.Brainstorming

Brainstorming is done with a group of people who focus on identification of risk for the project.

3.Checklists

4.Assumption Analysis

5.Cause and effect diagrams

Explaination

1. Interviews:- Select key stakeholders. Plan the interviews. Define specific questions. Document the results of the interview.

2. Brainstorming:- Plan your brainstorming questions in advance.

• Project objectives. What are the most significant risks related to [project objective where the objective may be schedule, budget, quality, or scope]?
• Project tasks. What are the most significant risks related to [tasks such as requirements, coding, testing, training, implementation]?

3. Checklists:- See if your company has a list of the most common risks. If not, you may want to create such a list. After each project, conduct a post review where you capture the most significant risks. This list may be used for subsequent projects. Warning – checklists are great, but no checklist contains all the risks.

4. Assumption Analysis. The Project Management Body of Knowledge (PMBOK) defines an assumption as “factors that are considered to be true, real, or certain without proof or demonstration.” Assumptions are sources of risks. Project managers should ask stakeholders, “What assumptions do you have concerning this project?” Furthermore, document these assumptions and associated risks.

5.Cause and Effect Diagrams. Cause and Effect diagrams are powerful. Project managers can use this simple method to help identify causes--facts that give rise to risks. And if we address the causes, we can reduce or eliminate the risks.

Four basic types of risk responses are:-

1. Avoid

Avoiding a risk means to completely eliminate it. Not all risks can be eliminated, and some can only be eliminated at great cost, so you’ll want to analyze the costs and benefits of eliminating a given risk. Only then can you decide whether it’s worth the time, money, and effort.

2.Transfer

Transferring risk involves shifting the risk to some other entity, such as an insurance company. We do this all the time when we pay insurance premiums—paying a small amount each month and collectively absorbing risk for the unlucky few who need to file a claim. In all likelihood, you won’t need to use your insurance in any given year. However, if a costly accident does occur, that accident won’t bankrupt you.

3. Mitigate

The most common strategy for handling risk is to reduce that risk to an acceptable level. Since completely eliminating risk is often impossible or too costly, risk-mitigation is a key strategy for most project managers.

4. Accept

After analyzing all the variables, you’ll inevitably decide to simply accept some risks. In certain cases, the potential impact may be so small that it’s negligible. In other cases, the risk may be so low that it doesn’t make sense to spend money trying to avoid or mitigate it.

Whatever the case, make sure your executive sponsors sign off on any risk acceptance. You want to make sure they know you anticipated the risks and considered strategies for avoidance, transfer, or mitigation before going down the acceptance route.

Example about the positive risk: ending project before delivering date, or increasing the return on investment ROI.

Example about the negative risk: Delays in the delivery of the project or passing to the planned costs or anything else could affect the objectives of the project is considered a negative risk or “threat.”