POSTER 12
Section 4 · Risk Management — The Process
The Risk Management Process
An iterative cycle: set the strategy, find risks, size them (qualitatively then, where needed, quantitatively), plan & implement responses, and monitor — repeating throughout the life cycle. The risk register and risk report are the living artifacts that carry it.
Visual Map — Plan → Identify → Analyse → Respond → Monitor
1 · Plan
strategy, RBS, P&I scales ▸ 2 · Identify
ongoing → risk register ▸ 3 · Qualitative
P×I → prioritise ▸ 4 · Quantitative
model overall risk ▸ 5 · Plan Responses ▸ 6 · Implement ▸ 7 · Monitor ↺
strategy, RBS, P&I scales ▸ 2 · Identify
ongoing → risk register ▸ 3 · Qualitative
P×I → prioritise ▸ 4 · Quantitative
model overall risk ▸ 5 · Plan Responses ▸ 6 · Implement ▸ 7 · Monitor ↺
Identify and Monitor never stop. Quantitative analysis is optional — used on larger/complex efforts to size overall risk and justify reserves; qualitative is the fast triage every time.
Threat Responses
- Avoid
- eliminate the threat or its cause (change the plan).
- Transfer
- shift impact & ownership to a third party (insurance, warranty, fixed-price).
- Mitigate
- reduce probability and/or impact.
- Accept
- take no action (passive) or set a contingency (active).
- Escalate
- raise to the level with authority to act.
Opportunity Responses
- Exploit
- make certain the opportunity is realised (mirror of Avoid).
- Share
- partner with someone better able to capture it (mirror of Transfer).
- Enhance
- increase probability and/or impact (mirror of Mitigate).
- Accept
- take it if it arrives, but don't actively chase it.
- Escalate
- raise to the level that can pursue it.
Tools by Step
- Identify: brainstorming, checklists, RBS, assumption analysis, SWOT, interviews.
- Qualitative: probability & impact (P-I) matrix, risk categorisation, urgency.
- Quantitative: EMV, decision tree, Monte Carlo, sensitivity / tornado.
- Reserves: contingency vs management reserve analysis.
Reserves — Funding Uncertainty
- Contingency reserve — for known risks; inside the cost baseline; the PM controls it.
- Management reserve — for unknown risks; outside the baseline; management approves its release.
Exam Concepts
- Qualitative = subjective P×I, fast; quantitative = numeric model of overall risk.
- Contingency (known, PM) vs management (unknown, mgmt) reserve.
- Risk owner manages the risk; a response owner executes an action.
- A trigger is the early-warning sign a risk is occurring.
Executive View
- Quantitative analysis defends the contingency ask to the board.
- Response strategy = a cost-vs-exposure trade, not box-ticking.
- Watch overall risk, not just the loudest single risk.
Industry Example
Manufacturing
- Line install: supplier-delay risk → qualitative HIGH → Monte Carlo shows P80 finish +5 wks → response = transfer (LD clause) + mitigate (dual-source).
60-sec Review
Recite the 7-step cycle
5 threat responses
5 opportunity responses
Qual vs quant
Contingency vs management reserve
PMI Visual Wall · Poster 12 · Risk — The Process & Responses · original instructional design · A3 landscape