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Topics: Risk Management
Overall Risk of Project
Network:133



Hi,
Yesterday during my work i came across Overall all risk of Project.

What is overall risk of project?
How it is derived?
Qualitative risk analysis gives picture to individual risk but how it is affecting overall project risk?
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The overall risk is an attempt at looking at all the risks on projects in a portfolio, and compare the risk level of each project based on the number, likelihood, and consequence of all the risks combined.

If you had a choice between investing in 2 projects of the same NPV, often you would choose the one with the lowest risk. When looking at multiple projects already in-work, those with the highest risk might get the most attention.

Deriving it is very subjective since it deals with the quantity, cost/probability distribution, and risk appetite for different types of risks. It can can be as subjective as leaders looking at a "risk cube" of each project and saying, "With 4 medium risks and 2 high risks this project is probably high risk." Or it can be some weighting system that tries to calculate a single absolute value for comparison.
...
1 reply by John Tieso
Apr 08, 2019 11:35 AM
John Tieso
...
My process is relatively simple -- a spreadsheet risk register with several columns:
-Risk Title
Risk Description
Relative value (high, medium, low) (here if like red, yellow, green)
Potential disposition (Must Cure, Avoid, transfer, etc)
Requirement which applies

Looking at the chart, the highs (reds) stand out, as do the Must Cures
You can develop a point system for each and look at totals in aggregate. The sliding total scale tells you where the most work is needed, and in a portfolio, gives you indicators of how much work is needed over the timeline to ensure success

Hope this helps.
Network:1472



Keyulkumar -

As Keith has indicated, the overall risk relates to the interactions between all the identified and unidentified risks on a project. A common approach used early in a project's life before the team has a chance to do a detailed risk identification & analysis workshop might be to use some sort of risk checklist or project profiling tool which will ask a standard set of questions and evaluate the project's risk on a qualitative scale based on the answers to those questions.

This type of information is usually helpful when making portfolio investment decisions or when deciding how to staff key roles (e.g. sponsor, PM).

Kiron
Network:21771



I agree with Kiron and Keith. You need to take look at all of the risks and be ready for them.
Network:77



We have developed a proprietary scheme to determine overall project complexity and associated risk using a questionnaire type format based on over sixty questions. Projects are scored on overall project risk on a scale of 1 to 4, with 4 being the highest risk scenario. This is based on qualitative analysis and not quantitative analysis. Our governance structure determines the level of approval authority based on this score, so the score a project receives is very important. As Kiron mentioned we do this early on in the project life cycle, and once the score has been determined it really never changes.
Network:133



Thanks to all,
Please correct me if my understanding is not at par, individuate risk probability and impact will be summarized and it will gives the overall project risk.
It will be used at Program level and to select best project of same NPV (for decision making process).

Also if overall project risk is higher it required more attention from sponsor or stakeholders.

But Steve I still have not agreed that overall project risk never change during project life cycle.
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2 replies by Kiron Bondale and Steve Ratkaj
Apr 05, 2019 8:05 AM
Kiron Bondale
...
Keyulkumar -

Overall project risk is not just the sum of the identified risks. Remember that risk covers both known-unknowns and unknown-unknowns and project risk needs to consider both. Also, if we only consider discrete risks we will ignore the interactions and interdependencies between them.

PMI will be releasing the Risk Management practice standard refresh soon. The updated version has much more coverage of the difference between individual risks and project/program/portfolio-level risks.

Kiron
Apr 09, 2019 10:06 AM
Steve Ratkaj
...
I agree in principle, but our projects are very large and lengthy, and typically the overall project risk level does not change during the life of the project. The overall project risk is determined early on to assign levels of approval authority. Yes, project risks will come and go, but the overall project risk and complexity remain fairly constant as were are speaking typically in the billions of dollars.
Network:1472



Apr 04, 2019 10:52 PM
Replying to KEYULKUMAR DAVE
...
Thanks to all,
Please correct me if my understanding is not at par, individuate risk probability and impact will be summarized and it will gives the overall project risk.
It will be used at Program level and to select best project of same NPV (for decision making process).

Also if overall project risk is higher it required more attention from sponsor or stakeholders.

But Steve I still have not agreed that overall project risk never change during project life cycle.
Keyulkumar -

Overall project risk is not just the sum of the identified risks. Remember that risk covers both known-unknowns and unknown-unknowns and project risk needs to consider both. Also, if we only consider discrete risks we will ignore the interactions and interdependencies between them.

PMI will be releasing the Risk Management practice standard refresh soon. The updated version has much more coverage of the difference between individual risks and project/program/portfolio-level risks.

Kiron
...
1 reply by KEYULKUMAR DAVE
Apr 06, 2019 1:41 AM
KEYULKUMAR DAVE
...
Thanks Kiron
I will wait for the RMP guide to increase knowledge base.
Network:133



Apr 05, 2019 8:05 AM
Replying to Kiron Bondale
...
Keyulkumar -

Overall project risk is not just the sum of the identified risks. Remember that risk covers both known-unknowns and unknown-unknowns and project risk needs to consider both. Also, if we only consider discrete risks we will ignore the interactions and interdependencies between them.

PMI will be releasing the Risk Management practice standard refresh soon. The updated version has much more coverage of the difference between individual risks and project/program/portfolio-level risks.

Kiron
Thanks Kiron
I will wait for the RMP guide to increase knowledge base.
Network:642



Agreed with Kiron
Network:634



If you want to obtain overall risk of a project typically you need to use quantitative analysis to consider the interactions and interdependencies between individual risks.
...
1 reply by KEYULKUMAR DAVE
Apr 08, 2019 9:27 PM
KEYULKUMAR DAVE
...
Thanks Mario.
I had few questions for it.
1. Do we have to follow quantitative risk analysis for every project? Generally Qualitative risk analysis can give everything and risk response can be planned.
2. For risk Analysis which method is Used; Sensitivity Analysis or Monte carlo Risk Analysis?
Network:1084



Apr 04, 2019 12:49 AM
Replying to Keith Novak
...
The overall risk is an attempt at looking at all the risks on projects in a portfolio, and compare the risk level of each project based on the number, likelihood, and consequence of all the risks combined.

If you had a choice between investing in 2 projects of the same NPV, often you would choose the one with the lowest risk. When looking at multiple projects already in-work, those with the highest risk might get the most attention.

Deriving it is very subjective since it deals with the quantity, cost/probability distribution, and risk appetite for different types of risks. It can can be as subjective as leaders looking at a "risk cube" of each project and saying, "With 4 medium risks and 2 high risks this project is probably high risk." Or it can be some weighting system that tries to calculate a single absolute value for comparison.
My process is relatively simple -- a spreadsheet risk register with several columns:
-Risk Title
Risk Description
Relative value (high, medium, low) (here if like red, yellow, green)
Potential disposition (Must Cure, Avoid, transfer, etc)
Requirement which applies

Looking at the chart, the highs (reds) stand out, as do the Must Cures
You can develop a point system for each and look at totals in aggregate. The sliding total scale tells you where the most work is needed, and in a portfolio, gives you indicators of how much work is needed over the timeline to ensure success

Hope this helps.
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