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Risk Management
Concepts and Guidance, Fifth Edition
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Book Description
This new edition of Risk Management: Concepts and Guidance supplies a look at risk in light of current information, yet remains grounded in the history of risk practice. Taking a holistic approach, it examines risk as a blend of environmental, programmatic, and situational concerns. Supplying comprehensive coverage of risk management tools, practices, and protocols, the book presents powerful techniques that can enhance organizational risk identification, assessment, and management—all within the project and program environments. Updated to reflect the Project Management Institute’s A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fifth Edition, this edition is an ideal resource for those seeking Project Management Professional and Risk Management Professional certification. Emphasizing greater clarity on risk practice, this edition maintains a focus on the ability to apply "planned clairvoyance" to peer into the future. The book begins by analyzing the various systems that can be used to apply risk management. It provides a fundamental introduction to the basics associated with particular techniques, clarifying the essential concepts of risk and how they apply in projects. The second part of the book presents the specific techniques necessary to successfully implement the systems described in Part I. The text addresses project risk management from the project manager’s perspective. It adopts PMI’s perspective that risk is both a threat and an opportunity, and it acknowledges that any effective risk management practice must look at the potential positive events that may befall a project, as well as the negatives.Providing coverage of the concepts that many project management texts ignore, such as the risk response matrix and risk models, the book includes appendices filled with additional reference materials and supporting details that simplifying some of the most complex aspects of risk management.
Table of Contents
RISK PROCESSES AND PRACTICES: WHY RISK MANAGEMENT?
Risk Management Practices
A Systematic Process
Summary
Risk Concepts
Risk Attitudes and Appetites
Classifying Risk
Risk Breakdown Structure
Risk Taxonomy
Risk Facets
Other Risk Categories
Taxonomically Developed Risks
Other Relevant Considerations
Risk Management Perspectives
Realities of Project Management
Summary
The Risk Management Structure
Risk Management Planning
Description and Project Summary
Risk Environment
Approach to Risk Management
Application Issues and Problems
Other Relevant Plans
Risk Governance
Approach Summary
Bibliography
Approvals
Identify Risks
Documentation Reviews
Information-Gathering Techniques
Checklists
Assumptions Analysis
Diagramming Techniques
Perform Qualitative Analysis
Baselining Risk
Rating Schemes and Definitions
Assumptions Testing
Risk Modeling
Using Analogies
Conducting Data Quality Assessments
Risk Categorization
Risk Urgency Assessment
Perform Quantitative Analysis
Expert Interviews
Expected Monetary Value (EMV)
Decision Tree Analysis
Program Evaluation and Review Technique
Sensitivity Analysis
Simulations
Plan Risk Responses
Risk Avoidance
Risk Transference
Risk Mitigation
Risk Acceptance
Opportunity Exploitation
Opportunity Sharing
Opportunity Enhancement
Opportunity Acceptance
Monitor and Control Risks
Summary
RISK MANAGEMENT TECHNIQUES
Expert Interviews
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Planning Meetings/The Risk Management Plan
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Practice Methodology
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Documentation Reviews
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability 100
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Analogy Comparisons
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Plan Evaluation
Technique Description
Using the WBS for Risk Identification
Using Specifications for Risk Identification
Using Statements of Work (SOWs) for Risk Identification
Developing a Technical Risk Dictionary or Risk Register
Using Other Plans for Risk Identification
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Delphi Technique
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Brainstorming
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Crawford Slip Method (CSM)
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
SWOT Analysis
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Checklists
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Breakdown Structure
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Root Cause Identification and Analysis
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Registers/Tables
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Project Templates
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Assumptions Analysis
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Decision Analysis–Expected Monetary Value
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Estimating Relationships
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Network Analysis (Excluding PERT )
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
PERT
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Other Diagramming Techniques
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying These Techniques
Flowcharts
Ishikawa (Fishbone) Diagrams
Force Field Diagrams
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Rating Schemes
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Scheme Development
Scheme Application
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Urgency Assessment
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Futures Thinking
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Modeling
Technique Description
When Applicable
Inputs and Outputs
Model Development
Model Application
Major Steps in Applying the Technique
Model Development
Model Application
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Sensitivity Analysis
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Monte Carlo Simulations
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Factors
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Response Matrix /Pugh Matrix
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Performance Tracking and Technical Performance Measurement
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Supplemental Information
Technical Performance
Schedule Performance
Cost Performance
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Risk Reviews and Audits
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Resource Requirements
Applications
Outputs
Summary
Other Common Techniques
Cost Performance Reports Analysis
Independent Technical Assessment
Technique Description
When Applicable
Inputs and Outputs
Major Steps in Applying the Technique
Use of Results
Resource Requirements
Reliability
Selection Criteria
Independent Cost Estimates
Glossary
Appendix A: Contractor Risk Management
Appendix B: An Abbreviated List of Risk Sources
Appendix C: Basic Probability Concepts
Appendix D: Quantifying Expert Judgment
Appendix E: Special Notes on Software Risk
Index
Author(s)
Biography
Carl L. Pritchard is the principal of Pritchard Management Associates and is a widely recognized risk management authority and lecturer. He was the lead chapter author for the risk management chapter of A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Fourth Edition. Mr. Pritchard’s publications include courses in risk management, The Risk Management Memory Jogger (GOAL/QPC, 2012), as well as Project Management: Lessons from the Field (iUniverse, 2009), The Project Management Communications Toolkit, Second Edition (Artech House, 2012), How to Build a Work Breakdown Structure, and Precedence Diagramming: Successful Scheduling in the Team Environment. He co-produced (with ESI’s LeRoy Ward) the landmark 9-CD audio collection The Portable PMP® Exam Prep: Conversations on Passing the PMP® Exam (Fourth Edition). He is the U.S. correspondent for Project Manager Today, a project management journal published in the United Kingdom.
Mr. Pritchard also designs and develops project management programs and was the original architect of ESI International’s landmark offerings in project management in a distance-learning format. He is a trainer both online and in the classroom.
In his role as lecturer, Mr. Pritchard speaks regularly at national symposia on project management and serves as the "speaker’s coach" for several national conferences, providing guidance on how most effectively to share the project management gospel.
He is active in professional project management associations and is a certified Project Management Professional (PMP®), a certified Risk Management Professional (PMI-RMP®), and an Earned Value Professional (EVP), as certified by the Association for the Advancement of Cost Engineering (AACE) International. Mr. Pritchard earned a B.A. in journalism from The Ohio State University.
Mr. Pritchard can be reached via e-mail at [email protected]