Plan Risk Management

00:01 Hello and welcome.

00:02 This module will focus on the plan risk management process and the PMBOK guide. It's one of the many planning processes that produces an individual management plan.

00:13 We've seen many of these already.

00:16 And therefore, the difficulty is low.

00:18 There are some new concepts to introduce to you around risk and uncertainty.

00:22 So memorization is ranked as medium and exam importance is also ranked as medium.

00:30 The particular domain task that this process helps us understand better is Planning Task 10.

00:39 Which says develop the risk management plan by identifying, analyzing and prioritizing project risks and defining risk response strategies in order to manage uncertainty and opportunity throughout the project lifecycle.

00:59 The key theme of the plan risk management process is to anticipate and plan for uncertainty in the project with a risk management plan. All good project management starts with a good plan.

01:14 This is the plan to give us good risk management as part of our project.

01:20 Just before we go on to the inputs, tools and techniques and outputs, let's cover a few of the basic concepts about risk management.

01:29 It can be slightly difficult or tough to get your head around some of the concepts and the whole of the risk management knowledge area.

01:37 So if you don't currently do a lot of risk management in the projects you've been working on, pay particular attention to this module.

01:46 The whole concept of risk management or uncertainty management will feature in the exam in quite a few different ways.

01:52 You'll see uncertainty and planning for uncertainty and contingency reserves and qualitative analysis and quantitative analysis and communicating all of this to stakeholders.

02:04 So look out for risk management and many different forms in the exam.

02:09 One of the key things about effective risk management, it's always about planning and being proactive wherever possible.

02:17 Yes, we've got some strategies for reactive risk management, but given the opportunity, we're always going to try and be proactive with dealing with risk.

02:26 So give the section a little extra attention if you don't normally deal with risk management in your projects.

02:35 Things you need to know, though, when it comes to risk management, most people automatically think of bad risks that negatively affect the project.

02:45 But risk simply means uncertainty.

02:48 In fact, uncertainty is a very good synonym for risk.

02:53 So in addition to the bad risks that can negatively affect the project, there are good risks that can positively affect the project.

03:01 There is the risk that you'll come in under budget.

03:04 There is the risk that you'll exceed client expectations.

03:07 There is the risk that you'll have no downtime as a result of health and safety.

03:12 These are all good risks.

03:15 And you should plan to take advantage of those in just the same way you plan to avoid or mitigate the bad risks.

03:24 So remember that for the exam, there are good and there are bad risks and risk just relates to uncertainty.

03:34 So let's take a look at the inputs that we might find useful in the development of our risk management plan.

03:40 The first input is, of course, our project management plan and all of its subsidiary plans, documents and baselines because risk can occur at any point in the project. We can have risk related to project scope, time, cost, quality, human resources, procurement.

03:58 Any other area of the project can be impacted by risk.

04:03 So we want all of those other parts of our project management plan so we can examine them and see where uncertainty has been highlighted.

04:12 Given that this is an initial planning process, will probably find the project charter to be useful as well.

04:19 Remember, it's the document that approves our project and appoints the project manager.

04:25 It's an output from the developed project charter process, but one of the other things that will probably find in the project charter is a description of known uncertainty or risk at that initiating point in the project. We'll also want our stakeholder register, which is an output from the identify stakeholders process, because it's going to tell us who the stakeholders are and we can go talk with them about their perceptions of uncertainty, what their particular tolerance for risk is on the project and how they would like to see risks managed on the project.

05:04 We might also want some enterprise environmental factors, particularly government regulations or industry regulations, about how risks are to be managed and addressed.

05:15 Organizational process assets such as our project management methodology, specifically the parts of it relating to risk such as a blank risk register may be useful to us here as well.

05:29 So all of the inputs are useful to us.

05:34 But the other aspects of the project management plan, as I've already said, will provide guidance for the development of the risk management plan, especially around the level of detail and format, because if your project management plans at the stage are still on their first iteration, that indicates a very, very high level uncertainty about planning in many parts of the project.

05:57 And as I've already said, the Project Charter will describe the high level risks known at the time of project initiation, and the stakeholder register allows you to contact stakeholders and talk to them about their perceived risks, their level of risk tolerance and their expectations about what risk management should be like on your project. The particular tools and techniques that we can apply if useful to those inputs, our analytical techniques, well, analytical techniques just means any way you can analyze any of those documents you were looking at as inputs and you can look for trends or you can do any sort of analysis on them.

06:36 And you'll use that analysis to help you develop a comprehensive and accepted risk management plan reflecting the level of risk tolerance in your organization. Now, keep an eye out for risk tolerance.

06:50 Every organization has a different level of risk tolerance.

06:54 Some organizations accept a lot of risk.

06:57 Some organizations are risk adverse.

07:00 The amount of risk tolerance that your organization has had will dictate the level of planning and the level of risk management work on your project.

07:11 Another tool and technique that you may choose to use is the expert judgment.

07:15 Remember, it's the tool and technique that we see most throughout the PMBOK guide, recognizing that you are an expert.

07:22 Your project team members are experts.

07:24 The project sponsor is an expert.

07:26 The client is an expert.

07:28 You may also choose to bring in professional risk management experts at this point to help you develop your risk management plan.

07:36 And you may choose to use meetings to facilitate discussion around the development of your risk management plan with those experts and any other stakeholders that need to be involved.

07:49 So remember, analytical techniques are just any way you can take a look at all of those documents.

07:58 The project management plans, the project charters the stakeholder register and determine risk tolerances and the risk cultures.

08:05 And of course, you'll probably also want to look at lessons learned from previous projects. One of the most valuable things we could do is to take a look at how previous projects manage risks.

08:16 Did they underestimate risks? Did they overestimate risks? Were their responses appropriate? Was the level of planning appropriate for the level of risk tolerance or risk culture? So do go looking for lessons learned, particularly for good risk management processes.

08:34 There's just a single output from this process, and that is the risk management plan. And as we know, all project management starts with good planning.

08:44 The risk management plan is going to provide guidance to us on how we complete those other four planning activities and our single monitoring and controlling activities.

08:56 So that's what we want to use it for.

08:57 So it has to be detailed enough to allow us to do that.

09:03 So we create our risk management plan as the sole output from this process.

09:09 The risk management plan will then become an input into the next planning processes, and of course, we'll always make sure that our particular approach to risk management reflects the level of risk tolerance or risk avoidance of our project or our organization.

09:29 Another thing, though, that the risk management plan may include is a risk breakdown structure we may put into it the decomposition of all of our risk categories.

09:41 Like all the other breakdown structures mentioned in the Bot guide, that's the work breakdown structure, the organization breakdown structure and the resource breakdown structure.

09:51 The risk breakdown structure is a graphical decomposition of a high level concept and in this case, down into separate risk categories.

10:01 It doesn't identify individual risks that comes later, but it does give us the categories which will go looking for.

10:11 So it uses categories and subcategories, and it may include some references to particular areas of risks, but not specific risks themselves. And one of its key purposes is to function as a reminder of the many sources from which risks may arise on our project. So the use of a risk breakdown structure starts our planning processes, but don't confuse it with the other RBS the resource breakdown structure mentioned in the PMBOK guide.

10:43 Here's an example of a very generic type of risk breakdown structure.

10:48 And on this project, the first level of categories we've identified a technical, external, organizational and project management categories. And then we've broken each of those down into subcategories of potential risk.

11:03 So under project management, you can see we've highlighted estimating planning controlling and communication as potential subcategories. We can then go on to use these categories to look for and think about and brainstorm individual risks that may occur in each of those categories.

11:26 So that's the benefit of the risk breakdown structure, helping us gain a full understanding of all of the possible risks that may occur on our project. So in summary, the plan risk management process is the process that develops the risk management plan, and as we know, that plan is going to provide guidance to us for all of our other risk management work, and it will also develop for us our risk breakdown structure. Thank you very much.

11:56 This has been an introduction and an overview to the plan risk management process and the PMBOK guide.