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Project Risk Management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.
Project Risk is an uncertain event or condition that, if occurs, has a positive or a negative effect on a project objective.
There are following six processes which are part of Project Risk Management.
•Plan Risk Management
•Perform Qualitative Risk Analysis
•Perform Quantitative Risk Analysis
•Plan Risk Responses
Few Important points
A project risk is a potential source of deviation from the project plan. Project risks can have a negative or positive impact on the project. Project risks that are negative are called threats. Project risks that are positive are called opportunities.
Insurance is an example of transferring risk.
Non-critical risks should be documented. They should be revisited and reviewed regularly.
Risks are identified in all phases
Delphi technique is most commonly used to obtain expert opinions on technical issues.
1. Plan Risk Management
2. Identify Risks
3. Perform Qualitative Risk Analysis
4. Perform Quantitative Risk Analysis
5. Plan Risk Responses
6. Control Risks
These questions are randomly taken from TechFaq360 PMP success kit
Question - 2
Overtime associated with the execution effort of a project is estimated at 120 hours with probability 0.5, 250 hours with probability 0.6, and 300 hours with probability 0.3. What is the monetary value of the amount of overtime? 1.300 hours 2.670 hours 3.250 hours 4.100 hours
Correct Answers are : 1 Explanation : A is the correct answer.
The Monetary Value of the amount of overtime is (120 x 0.5) + (250 x 0.6) + (300 x 0.3) = 300 hours.
Question - 5
Your team has just bagged a software development project.The executive management is very pleased as this is a very prestigious project.However you are a little worried considering the complex nature of the project.You decide to try and identify the possible risks.You get all relevant stakeholders together and conduct mammoth discussions.Together you have come up with a number of risks.However based on your experience - you still feel that not all the risks have been identified.You decide to set aside some budget for the risks that you have not identified but are sure you will encounter.Where does this budget come from? 1.Cost Management Plan 2.Cost Baseline 3.Contingency Reserves 4.Management Reserve
Correct Answers are : 4 Explanation :
The type of risk here is an unknown risk.For known risks risk responses can be proactively planned for.For the known risks where we cannot plan proactively - we set aside a reserve called Contingency Reserves.For unknwon risks we set aside a Management Reserve.Cost management Plan deals with how you will manage costs on your project and Cost baseline is the baselined cost expected to be expended on the project.