Hi All

Here is some useful concise information on various Tools and Techniques
used for Risk Management...........

regards

Sameer

Risk Management – Useful Tools and Techniques

In this section, the tools and methodologies that you can use during
various phases of managing a risk are briefly described.

Risk Identification

There are many tools and techniques for Risk identification. Documentation
Reviews

• Information gathering techniques
• Brainstorming
• Delphi technique – here a facilitator distributes a questionnaire
  to experts, responses are summarized (anonymously) & re-circulated among
  the experts for comments. This technique is used to achieve a
  consensus of
  experts and helps to receive unbiased data, ensuring that no one person
  will have undue influence on the outcome
• Interviewing
• Root cause analysis – for identifying a problem, discovering the
  causes that led to it and developing preventive action.
• Assumption analysis -this technique may reveal an inconsistency of
  assumptions, or uncover problematic assumptions.
• Diagramming techniques
• Cause and effect diagrams
• System or process flow charts
• Influence diagrams – graphical representation of situations,
  showing the casual influences or relationships among variables
  and outcomes
• SWOT analysis
• *Expert judgment *– individuals who have experience with similar
  project in the not too distant past may use their judgment through
  interviews or risk facilitation workshops

Risk Analysis

*Tools and Techniques for Qualitative Risk Analysis *

• Risk probability and impact assessment – investigating the
  likelihood that each specific risk will occur and the potential effect on a
  project objective such as schedule, cost, quality or performance (negative
  effects for threats and positive effects for opportunities), defining it in
  levels, through interview or meeting with relevant stakeholders and
  documenting the results.
• *Probability and impact matrix *– rating risks for further
  quantitative analysis using a probability and impact matrix, rating rules
  should be specified by the organization in advance. See example in appendix
  B.
• Risk categorization – in order to determine the areas of the project
  most exposed to the effects of uncertainty. Grouping risks by common root
  causes can help us to develop effective risk responses.
• *Risk urgency assessment *– In some qualitative analyses the
  assessment of risk urgency can be combined with the risk ranking determined
  from the probability and impact matrix to give a final risk sensitivity
  rating. Example- a risk requiring a near-term responses may be considered
  more urgent to address.
• *Expert judgment *– individuals who have experience with similar
  project in the not too distant past may use their judgment through
  interviews or risk facilitation workshops.

*Tools and Techniques for Quantities Risk Analysis *

• Data gathering & representation techniques
• Interviewing–You can carry out interviews in order to gather an
  optimistic (low), pessimistic (high), and most likely scenarios.
• Probability distributions– Continuous probability distributions
  are used extensively in modeling and simulations and represent the
  uncertainty in values such as tasks durations or cost of project
  components\ work packages. These distributions may help us perform
  quantitative analysis. Discrete distributions can be used to represent
  uncertain events (an outcome of a test or possible scenario in
  a decision
  tree)
• Quantitative risk analysis & modeling techniques– commonly used for
  event-oriented as well as project-oriented analysis:
• Sensitivity analysis – For determining which risks may have the
  most potential impact on the project. In sensitivity analysis
  one looks at
  the effect of varying the inputs of a mathematical model on the output of
  the model itself. Examining the effect of the uncertainty of each project
  element to a specific project objective, when all other
  uncertain elements
  are held at their baseline values. There may be presented
  through a tornado
  diagram.
• Expected Monetary Value analysis (EMV) – A statistical concept
  that calculates the average outcome when the future includes
  scenarios that
  may or may not happen (generally: opportunities are positive
  values, risks
  are negative values). These are commonly used in a decision tree analysis.
• Modeling & simulation – A project simulation, which uses a model
  that translates the specific detailed uncertainties of the project into
  their potential impact on project objectives, usually iterative. Monte
  Carlo is an example for a iterative simulation.
• Cost risk analysis – cost estimates are used as input values, chosen
  randomly for each iteration (according to probability distributions of
  these values), total cost will be calculated.
• Schedule risk analysis – duration estimates & network diagrams are
  used as input values, chosen at random for each iteration (according to
  probability distributions of these values), completion date will be
  calculated. One can check the probability of completing the project by a
  certain date or within a certain cost constraint.
• Expert judgment *– used for identifying potential cost & schedule
  impacts, evaluate probabilities, interpretation of data, identify
  weaknesses of the tools, as well as their strengths, defining when is a
  specific tool more appropriate, considering organization’s capabilities &
  structure, and more.

*Risk Response Planning *

• Risk reassessment – project risk reassessments should be regularly
  scheduled for reassessment of current risks and closing of risks.
  Monitoring and controlling Risks may also result in identification of new
  risks.
• *Risk audits *– examining and documenting the effectiveness of risk
  responses in dealing with identified risks and their root causes, as well
  as the effectiveness of the risk management process. Project Manager’s
  responsibility is to ensure the risk audits are performed at an appropriate
  frequency, as defined in the risk management plan. The format for the audit
  and its objectives should be clearly defined before the audit is conducted.
• Variance and trend analysis – using performance information for
  comparing planned results to the actual results, in order to control and
  monitor risk events and to identify trends in the project’s execution.
  Outcomes from this analysis may forecast potential deviation (at
  completion) from cost and schedule targets.
• *Technical performance measurement *– Comparing technical
  accomplishments during project execution to the project management plan’s
  schedule. It is required that objectives will be defined through
  quantifiable measures of technical performance, in order to compare actual
  results against targets.
• Reserve analysis – compares the amount of remaining contingency
  reserves (time and cost) to the amount of remaining risks in order to
  determine if the amount of remaining reserves is enough.
• Status meetings – Project risk management should be an agenda item
  at periodic status meetings, as frequent discussion about risk makes it
  more likely that people will identify risks and opportunities or advice
  regarding responses. “