in this lecture we will discuss few principles and Concepts and terminologies when it comes to risk management starting with a Project's risk which we are which we defined earlier just to confirm it's an uncertain event or condition that if it occurs has a positive or negative efforts on project objective so it's either positive an opportunity or negative as a threat it might happen it might not it's an uncertain event now what's the risk management it can be defined as systematic and proactive approach to taking to taking control over projects by understanding or decreasing uncertainties it's not a one-time only process it's repeated throughout the project life so it's systematic and the most important it's a proactive approach we want to take control over the project we don't want to be controlled by the project and the uncertainty is there so the aim of conducting risk management activities is to to reduce uncertainty so what's uncertainty uncertainty is the lack of knowledge about an event that reduces confidence in conclusion drawn from the data when you are not sure about information or about an event this is uncertainty if I tell you it might rain heavily three weeks from today and you need to remove any material stored outside of your building so this is this is uh an uncertain event I'm not sure the forecast says that there might be heavy rain after three weeks but we are not sure this is uncertainty Whenever there is an uncertainty there is a potential risk what's an opportunity it's a positive set of events or a risk that if occurred will have a positive impact on a project objectives so RS can be an opportunity or a threat an opportunity with positive impact on Project objectives while a threat with negative impact or effect on Project objectives now there are two types of risks business risk which is a risk of gain or loss or pure risk which is the risk of loss only I I had one question in my PMI rmp exam it was simple one asking about the the probability of having a fire in your building is this a business or pure risk it's a pure risk you cannot have any gain from a fire so business risk profit or gain or loss while pure risk it's a risk of loss and an identified risk has two key Dimensions any identified risk should have two key Dimensions the first one is the uncertainty described using the term probability sometimes likelihood so I uncertainty probability and likelihood three terms for the same concept what's the percentage of this risk occurring forty percent thirty percent fifty percent this is the probability or the likelihood or the uncertainty the second dimension is the effect described using the term impact and it's known sometimes as consequences what's the impact of this risk a loss of five hundred thousand US Dollars saving in three weeks or two weeks of the project schedule this is the impact so it is something like the first name and the like and the last name of any human any risk should have the probability and the impact identified now what are the four risk factors starting with the probability which is the likelihood that arrest will occur the impact which is the effect on the project if the risk occurs expected timing when during the life of the project the risk might occur at the beginning of the project at the end of the project this is the expected timing the frequency of the event how many times the risk might occur during the life of the project these are the four risk factors probability impact expected timing and frequency of the event now what are the risk acceptance levels known sometimes as the risk attitudes how as your organization thinking about risks what's their appetite toward risks so it can be identified the risk acceptance levels as one of these three terms starting with the most high level one which is the risk appetite it's a general high-level description of the acceptable range of risk so it's very high level the risk tolerance it's more detailed than the risk appetite it's the measurable amount of acceptable risk it's measurable the risk threshold the last term and it's the most specific one it's the specific point at which risk becomes unacceptable so how you are going to identify the risk acceptance levels for a key stakeholder in your project or your organization through using one of these terms the risk appetite the risk tolerance or the risk threshold the risk threshold for example your company cannot accept any risk with an impact of more than 10 000 US Dollars loss this is a risk threshold so any risk with higher impact than than 10 000 US Dollars lost in this case you should escalate it and refer back to your management this is an example of the risk threshold usually in projects risk exists at two levels project risk management should consider addressing both risks starting with the individual project risk which can be defined as uncertain event or condition that if it occurs has a positive or negative effects on Project objectives it can affect the achievement of the project objectives the overall project risk it's the effect of uncertainty of the project as a whole we are not talking about individual risks we are talking about the project as a whole arises from all sources of uncertainty including individual risks representing the exposure of the stakeholders to the implications of variations and project outcome both positive or negative so you will deal with individual project risks and overall project risks now risk attitudes which which is a similar term to the risk acceptance level the risk attitudes of project stakeholders determine the extent to which an individual rest or overall project rest can matter and this is what I told you earlier it's important to understand the risk acceptance levels of the stakeholders and the organization or the risk attitude this will help you know how to deal with specific risks on the project how risk is regarded as usually strongly influenced by an organization's culture different organizations are more or less open and this often impacts the way risk management can be applied so it's important to understand risk attitudes of the key stakeholders on the pro in the project and your organization as well it's an important component of risk management it's the first part you need to identify when you kick off the risk management activities the risk attitude should be documented as part of the risk management plan these attitudes should be identified and managed proactively throughout risk management processes the amount of information available about project risks will usually increase as time goes on some risks will occur while other will not new risks will arise or be discovered and the characteristics of those identified might change as a result the project risk management processes should be repeated and the corresponding plans progressively elaborated throughout the Project Life the frequency and depth of reviews and updates will depend on the nature of the project the volatility of the environment in which the project is being implemented and this is similar of the degree of complexity and the innovation in your project required will will will direct the amount of efforts you need to spend on the risk management activities it will also direct the frequency and depth of reviews and updates needed when it comes to risk management project risk management success relies heavily in communication throughout the processes risk identification and Analysis depend on comprehensive input from stakeholders in a project to ensure that nothing significant is overlooked and that risks are realistically assessed so there is as I mentioned earlier strong relationship between risk management and communication management you should have open and honest communication regarding risk management activities communication of the results of the project risk management process should be targeted to meet the specific needs of each stakeholder and should be reflected within the overall project communication strategy so risk related Communications will be documented as part of the communication management plan and the communication strategy this demands effective and honest communication from the project risk management process to the rest of the project team and other project stakeholders now the project manager has overall responsibility for delivering a successful project which fully meets the defined objectives when it comes to risk management the role of the project manager may include first of all encouraging Senior Management support for project risk management activities it's the responsibility of the project manager to convince or seek the support of Senior Management to gain their support and to help them realize the value of conducting risk management activities developing and approving the risk management plan so it's the responsibility of the project manager to develop and approve the risk management plan facilitating open and honest communication about risk within the project team and with management and other stakeholders approving risk response strategies and the actions associated with these strategies before implementation regularly reporting risk status to key stakeholders with recommendations for appropriate strategic decisions monitoring the efficiency and auditing and auditing risk responses for their effectiveness and documenting Lessons Learned project risk management should be included as an integral part of all other project processes since project risks can affect project objectives anyone with an interest in achieving those objectives should play oral and project risk management and the last thing to mention in this lecture that roles and responsibilities for project risk management should be clearly defined and communicated and individuals should be held responsible and accountable for results also the real roles and responsibilities of risk management will be documented as part of the risk management plan