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Master of Business Administration-MBA Semester 4 Project Risk Management PM0016

Assignment Set - 2
Q 1. Describe the seven step risk management planning process Ans: The risk management planning is the process which helps to perform various risk management activities for a project. Planning for risk management is very essential. This process ensures that any plan made for the risk management, considers both risks as well as importance of the project. Thus good planning helps in providing a sufficient time to evaluate risks and take necessary actions to prevent it. As soon as the project is undertaken, there must be a plan for risk management and this plan must be completed before actual project planning is made. Requirements for risk management planning The basic inputs to the risk management planning process are:

Project scope statement: It provides range of possibilities related to the project. It forms basis for
documentation to make decisions on future projects and develop good understanding of project scope among the stakeholders. exceeds budget. This plan helps to make sure that project is completed within approved budget.

Cost management plan: This plan helps to access risk budget and report any contingencies that

Schedule management plan: This plan helps to report any variation or delay in project duration. This
plan helps to make sure that project is completed on time.

Communication management plan: This plan supports various interactions on the project and
encourages sharing of information based on the risks and responses.

Enterprise environmental factors: The enterprise environmental factors that influence this process is
risk attitudes2. The maximum amount of risk that organizations can tolerate also forms one of the factors that influence the process. registers, roles and responsibilities form the assets that influence this process. Tools and techniques The technique used for this process includes: Planning meetings and analysis Meetings are held to develop risk management plan. The project manager, stakeholders, experienced project team member, person responsible to manage risk planning are the important attendees in this meeting.

Organizational process assets: The risk categories, standard templates, lesson learned, stakeholder

Risk management responsibilities are assigned. Cost estimates and schedule activities are developed. Levels and types of risks as well as probability and impact matrix are defined in this meeting. Results of risk management planning process The results of the risk management planning process include:

Risk management plan: It defines the way the risk management process will be carried out in the
project. The risk management plan includes the following:

Risk categories: Here, risks are identified to a consistent level of detail and then categorized based on
the quality and impact. An organization can also use previously prepared risk categories that are structured into Risk Breakdown Structure. This helps to identify various possible causes of risks.

Budgeting: Quantitative assessments of the cost of the resources are estimated. Cost baseline, which
is time-phase budget, is also obtained to measure project performance. responsibilities assigned.

Roles and responsibilities: The project risk management team members are identified and Timing: The time-period for risk management process is defined as carried out throughout the project. Methodology: The tools and data sources used to perform risk management process are defined. Probability and impact matrix: Risks are prioritized based on the effect of the risks on the project
objectives. Risks are prioritized using a lookup table where risks are rated as high, moderate and low importance. These rating are quantitatively analyzed and based on the ratings, the risk responses are planned.

Tracking: Risk management activities are documented for the benefits of future projects.

Q 2. Write advantages & disadvantages of the following: a. Brainstorming b. Interview c. Consulting Experts d. Study project documentation e. Stakeholder analysis Ans: Risk Identification Methods Advantages Disadvantages Brainstorming Helps to share risks with others. Difficult to have get- together for Helps to gather lots of information meeting. and experience from the past Difficult to provide comfort level projects. to make them speak freely. Interviews Helps to reveal sensitive matters in Time consumed is more. face to face meeting. Helps to involve people in risk management. Consulting Experts Provide independent view on Costs more matters Sensitive information may be disclosed Study Project Provides documents of the risks Risks that have already been Documentation experienced from the past solved may re-emerge. project. Provides insight of the working procedure of a team. Stakeholders Analysis Asking the people involved, such Difficult to access stakeholders as stakeholders, in the project and and identify suitable interest understanding their interest and groups. potential actions. Q 3.Describe benchmarking, its advantages & limitations Ans: Benchmark is usually referred to as measuring or estimating quality. Benchmarking is a process of improving performance by identifying, adapting and measuring prominent practices and processes from any organization. In order to have smooth ongoing project, it is necessary to identify the costs, and factors that drive these costs. It is also important to find out the ways to reduce these costs and any performance gaps. Benchmarking concentrates more on measuring loss rather than finding out the cause of good result. Benchmarking is considered as a component of Total Quality Management (TQM). The benchmarking data is usually used for improvement of project results. If a reliable measure of benchmarking is not made in the organization, then there will be flow of risk issues, where you will not be able to have a correct estimation of project performance. This will later result in risk of defective outcome. Organizations with incorrect benchmarking process will not able to produce quality products as they will not be able to measure and compare the quality with previous in-house projects or with other best practice companies. This will develop the risk of losing customers and market value due to low quality products or services. Advantages of benchmarking Benchmarking gives scores to various aspects of your product or processes and then compares those scores with the scores of other benchmarked companies in order to identify the areas that need to be improved. Below are some of the advantages of benchmarking. It identifies the areas for improvement. It identifies risks. It helps to make strategic plans for continuous improvement. It satisfies the audit and the regulatory requirements. It reviews and monitors progress. It improves quality. Limitations of benchmarking

Even though benchmarking is a useful component for process improvement, it does have some limitations. Benchmarking focuses more on data rather than the process used to create that data. Below are some of the other limitations of benchmarking. Benchmarking needs lot of dedication to succeed. As the comparison of performance and processes is done on continuous basis, it is considered as the expensive and time-consuming process. No proper knowledge on downsides of adopting this benchmarking practice. Many benchmarking projects end with statement they are different from us and hence necessary information is not shared to compare required data for process improvement. Benchmarking process can be successful only if the senior management supports openness for change and new ideas. They should have dedication and must be willing to share the information with benchmarking partners. Q 4. List the steps in risk analysis. Ans: Steps in Risk Analysis A risk analysis is performed to determine the nature of the risk and its level of impact. Thus it forms the basis for decisions about risk treatments. The following steps are used to carry out the risk analysis process: Step 1: Identify threats Risk analysis process begins with the process of identifying threat in the project, which can be in the form of: Human: Threat can be from each individual or group of individuals in the form of illness, death or strikes. Operational: Threat can be in form of disruption to products, not being able to access or distribute the essential project equipments and so on. Reputational: Threat can be caused by damage to reputation in the market due to loss of good business partners. Procedural: Threat can be caused due to fraud accountability and failure of internal systems and controls. Project: Threat can be due to cost over-runs, insufficient product or service quality and so on. Financial: Threat can be caused by drop in stock market, business failure or unemployment. In order to identify these threats there are number of different approaches: 1. First, list all the sources of threats as listed and check whether any of these apply to your project. 2. Second, consider from the point of your organization or structures and analyze risks that might occur on those parts. 3. Check for any vulnerabilities within these structures. 4. Get different perspectives by asking other people. Step 2: Estimate risk After identifying the threats, the next step is to measure its impact. This can be done by estimating the probability of the event occurring and then multiplying these estimates with the cost that may incur to get the things right. Step 3: Managing risk Once you have identified and estimated the risk level, the next step is to find out ways to manage them. This can be done by selecting cost effective approaches. Accepting the risk is considered to be better and cost effective approach rather than using excessive resources to eliminate it. Sometimes, accepting risks enable you to plan for an event to minimize it, rather than eliminating a risk. Elimination sometimes causes alteration in project objectives and use of extra resources to get the alteration approved and hence may not be a feasible option. Risk can be managed in following ways:

By using existing assets: You can use the existing resources or can improve the existing systems or
accountability to respond to any risk events. You can also bring changes in responsibilities and internal controls. reduce the impact of that risk. A contingency plan helps you to take quick actions in a crisis situation.

By contingency planning: You must create a plan before accepting the identified risks so that you can By investing in new resources: You can decide on to bring new resources to deal with the identified
risk. If it is a high priority risk, then your organization must appoint some outsiders to deal some part of the risk management process.

Step 4: Reviews After completing the risk analysis and risk management processes, the next and final step will be review, which must be done on regular basis. The review processes include conducting formal reviews or may involve testing systems and plans.

Figure 1: Risk Analysis Process Q 5. Define the major content of a risk register Ans: Risk register (also called risk log) is important in risk management. It can be in the form of a simple document, spreadsheet, or a database system. This document is the means by which the risk identified are recorded and the actions to be taken to prevent these risks are provided. A table format is preferred while designing the risk register as appropriate information can be conveyed effectively through tables than information presented in the form of long paragraphs. Risk register comprises risk type, date, description of the risk, status, likelihood of occurrence, severity of effect counter measures and owner. Risk register (updates): Risk Register (updates) contains the suitable risk response for specific risks. The risk register is revised to reflect the results of the response planning process. Documenting a risk in detail should be qualified to the ranking of the risk (high risks in detail, low risks by listing). Risk Register contents include: Identified risks, their description like the area of the project affected, their causes and how they may affect project objectives Risk owners and people who are assigned with responsibilities. Results from the qualitative and quantitative risk analysis methods. Approved response strategies. Specific actions to execute the response plan. Budget and programme activities for responses. Evidences and caution signs for risks occurrence. Emergency plans with triggers and other allied emergency reserves. Standby plan to fall back upon when the risk occurs. Residual risks expected to be lasting after the strategy is implemented and accepted. Secondary risks originating directly from implementing a risk response. Q 6. Explain the difference between program and project in Business

Ans: The key difference between a program and a project is the limited nature of a project. A project must always have a specific end date, or else it is an ongoing program. One view of the differences between a program and a project in business is shown in the table below: Table 1: Differences between a Program and a project in Business Program Project It is ongoing and implemented within a business. It is Unique and is of definite duration. It manages projects which together improves It is designed to deliver an output at the right the performance of the organization. time and cost. Its success is measured in benefits. This includes Improvement of processes is not a continuous increased income, profits, decreased cost and operation. more satisfied customers. There is a process to change the predetermined It often reacts to changes in strategy and in the scope. environment in which the organization changes.

2011

Abhishek Jain - 511035358

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