12 · Risk — Process & Responses

POSTER 12

Section 4 · Risk Management — The Process

The Risk Management Process

An iterative cycle: set the strategy, find risks, size them (qualitatively then, where needed, quantitatively), plan & implement responses, and monitor — repeating throughout the life cycle. The risk register and risk report are the living artifacts that carry it.

Visual Map — Plan → Identify → Analyse → Respond → Monitor

1 · Plan
strategy, RBS, P&I scales ▸ 2 · Identify
ongoing → risk register ▸ 3 · Qualitative
P×I → prioritise ▸ 4 · Quantitative
model overall risk ▸ 5 · Plan Responses ▸ 6 · Implement ▸ 7 · Monitor ↺

Identify and Monitor never stop. Quantitative analysis is optional — used on larger/complex efforts to size overall risk and justify reserves; qualitative is the fast triage every time.

Threat Responses

Avoid: eliminate the threat or its cause (change the plan).
Transfer: shift impact & ownership to a third party (insurance, warranty, fixed-price).
Mitigate: reduce probability and/or impact.
Accept: take no action (passive) or set a contingency (active).
Escalate: raise to the level with authority to act.

Opportunity Responses

Exploit: make certain the opportunity is realised (mirror of Avoid).
Share: partner with someone better able to capture it (mirror of Transfer).
Enhance: increase probability and/or impact (mirror of Mitigate).
Accept: take it if it arrives, but don't actively chase it.
Escalate: raise to the level that can pursue it.

Tools by Step

Identify: brainstorming, checklists, RBS, assumption analysis, SWOT, interviews.
Qualitative: probability & impact (P-I) matrix, risk categorisation, urgency.

Quantitative: EMV, decision tree, Monte Carlo, sensitivity / tornado.
Reserves: contingency vs management reserve analysis.

Reserves — Funding Uncertainty

Contingency reserve — for known risks; inside the cost baseline; the PM controls it.
Management reserve — for unknown risks; outside the baseline; management approves its release.

Exam Concepts

Qualitative = subjective P×I, fast; quantitative = numeric model of overall risk.
Contingency (known, PM) vs management (unknown, mgmt) reserve.
Risk owner manages the risk; a response owner executes an action.
A trigger is the early-warning sign a risk is occurring.

Executive View

Quantitative analysis defends the contingency ask to the board.
Response strategy = a cost-vs-exposure trade, not box-ticking.
Watch overall risk, not just the loudest single risk.

Industry Example

Manufacturing

Line install: supplier-delay risk → qualitative HIGH → Monte Carlo shows P80 finish +5 wks → response = transfer (LD clause) + mitigate (dual-source).

60-sec Review Recite the 7-step cycle 5 threat responses 5 opportunity responses Qual vs quant Contingency vs management reserve

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