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11 - PROJECT RISK MANAGEMENT

As illustrated in Figure 11-10, an organization can rate a risk separately for each objective (e.g., cost, time,
and scope). In addition, it may develop ways to determine one overall rating for each risk. Finally, opportunities
and threats are handled in the same matrix using definitions of the different levels of impact that are appropriate
for each.

The risk score helps guide risk responses. For example, risks that have a negative impact on objectives,
otherwise known as threats if they occur, and that are in the high-risk (dark gray) zone of the matrix, may require
priority action and aggressive response strategies. Threats found in the low-risk (medium gray) zone may not
require proactive management action beyond being placed in the risk register as part of the watch list or adding
a contingency reserve. Similarly for opportunities, those in the high-risk (dark gray) zone, which may be obtained
most easily and offer the greatest benefit, should be targeted first. Opportunities in the low-risk (medium gray) zone
should be monitored.

11.3.2.3 risk data Quality Assessment

Risk data quality assessment is a technique to evaluate the degree to which the data about risks is useful
for risk management. It involves examining the degree to which the risk is understood and the accuracy, quality,
reliability, and integrity of the data about the risk.

The use of low-quality risk data may lead to a qualitative risk analysis of little use to the project. If data quality is
unacceptable, it may be necessary to gather better data. Often, the collection of information about risks is difficult,
and consumes more time and resources than originally planned. The values used in the example in Figure 11-10
are representative. The numbers of steps in the scale are usually established when defining the risk attitude of the
organization.

11.3.2.4 risk categorization

Risks to the project can be categorized by sources of risk (e.g., using the RBS), the area of the project affected
(e.g., using the WBS), or other useful categories (e.g., project phase) to determine the areas of the project most
exposed to the effects of uncertainty. Risks can also be categorized by common root causes. This technique helps
determine work packages, activities, project phases or even roles in the project, which can lead to the development
of effective risk responses.

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