3 & 4 Risk Analysis & Mitigation

Topic 3 & 4
BSR 654
RISK ANALYSIS
RISK MITIGATION
NOREHAN MOHD NOOR

What is RISK ANALYSIS ???
Risk analysis is essentially a problem-seeking activity. It

Involves –
 identifying the sources of risk applicable to the
Project;
 assessing their probable impact on the project; and
 creating a “short list” of the more problematic sources

of
DEFINITION :
WHAT DOES RISK ANALYSIS MEAN?
Risk analysis is the review (kaji semula) of the risks associated with a
particular event or action. It is applied to projects, information technology,
security issues and any action where risks may be analyzed on a
quantitative and qualitative basis. Risk analysis is a component of risk
management.
Risks are part of every IT project and business endeavour. As such, risk
analysis should occur on a recurring basis (dilakukan secara berulang2) and
be updated (dikemaskini utk menampung ancaman) to accommodate new
potential threats.
Strategic risk analysis minimizes future risk probability and damages.
The Process of Risk Analysis
• Risk analysis involves examining how project outcomes and
objectives might change due to the impact of the risk event.
• Once the risks are identified, they are analysed to identify

the qualitative and quantitative impact of the risk on the
project, so that appropriate steps can be taken to mitigate
them. The following guidelines are used to analyse risks.
The Process of Risk Analysis
FOR EXAMPLE: Risks are associated with individuals using a computer either incorrectly
or inappropriately, which creates security risks. Risks are also related to
projects that are not completed in a timely manner, resulting
insignificant/huge costs.
THE STRATEGY:
• First STEP, potential threats are identified
• Next STEP, quantitative and/or qualitative risk analysis is applied to study identified risks.
• QUANTITATIVE risk analysis measures expected risk probability to forecast estimated
financial losses from potential risks.
• QUALITATIVE risk analysis usually does not use empirical data (numbers), but review
threats, determines and establishes risk mitigation methods and solutions, through written
report.
• A CONTINGENCY PLAN may be used during risk analysis. If a risk is presented,
contingency plans help minimize damage.
Guidelines are used to analyse risks.
1. PROBABILITY OF RISK OCCURRENCE
• High probability – (80 % ≤ x ≤ 100%)
• Medium-high probability – (60 % ≤ x < 80%)
• Medium-Low probability– (30 % ≤ x < 60%)
• Low probability - ( 0 % < x < 30%)
2. RISK IMPACT
• High – Catastrophic / Bencana (Rating A – 100)
• Medium – Critical (Rating B – 50)
• Low – Marginal (Rating C – 10)
As a guideline for Impact Classification the following matrix is used:
PMI, 2008
Impact classification guideline
The score represents bottom thresholds for the classification of risks assuming “normal”
conditions. An upgrade of the score to the next or even next + 1 level is necessary, if the risk
is impacted by critical factors such as:
• How important the specific customer is
• Whether the project is critical for the further development of the relationship with the
customer
• The risk is already in the focus of the customer
• Specific penalties for deviations from project targets are agreed in the contract with the
customer
Risk Exposure
Risk Exposure or Risk Score is the value determined by multiplying the Impact
Rating with Risk Probability as shown below:-
Impact-Probability Matrix
The colours represent the urgency of risk response planning and determine
Risk Occurrence Timeframe
The timeframe in which this risk will have an impact is identified.
This is classified into one of the following:
In addition to classifying risks

according to the above guidelines,
it is also necessary to describe the
impact on cost, schedule, scope,
and quality in as much detail as
possible based on the nature of
the risk.
Examples Risk Classification :
Risk Response Planning
There may not be quick solutions to reduce or eliminate all the risks facing a
project. Some risks may need to be managed and reduced strategically over
longer periods. Therefore, action plans should be worked out to reduce these
risks. These action plans should include:
 Risk description with risk assessment
 Description of the action to reduce the risk
 Owner of the risk action
 Committed completion date of the risk action
All risk action plans should be allotted to the person identified to carry out the
action plan.
Risk Response Plans
For each risk, a risk response must be documented in the risk register in agreement with
the stakeholders. This should be ensured by the project manager.
Risk response plans are aimed at the following targets:
1. Eliminating the risk
2. Lowering the probability of risk occurrence
3. Lowering the impact of the risk on the project objectives
Risk response plans usually impact time and costs. It is therefore mandatory that the
time and cost for the defined response plan are calculated as precisely as possible.
Risk Response Plans
This also assists in selecting a response plan from the alternatives, and in verifying
whether the response plan is costlier or has more impact on one of the project
objectives than the risk itself.
After successfully implementing a set of response plans, the score of a risk could
be lowered in consultation with the stakeholders.
Risk response: Examples

3 & 4 Risk Analysis & Mitigation

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What is risk analysis?

What are the steps involved in risk analysis?

Topic 3 & 4

NOREHAN MOHD NOOR

Risk analysis is essentially a problem-seeking activity. It

 assessing their probable impact on the project; and

 creating a “short list” of the more problematic sources

• Once the risks are identified, they are analysed to identify

In addition to classifying risks

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