PMP Certification: Project Risk Management Tips (based on PMBOK® Guide, 6th Edition)


1. Plan Risk Management


2. Identify Risks


  • Structure of Risk Statements. In the risk register, a risk statement always starts with the risk cause and then defines the risk effect.
  • Triggers. Warning signs or low-priority risks not listed as one of the risk register elements until the Plan Risk Responses process is carried out. A project manager includes them on a watch list during Identify Risk process and monitors periodically if they need escalation to the risk register.
  • Uncertainty or Estimate. Whenever the PMP exam mentions the words “uncertainty” or “estimate” – for PMP example, in questions on time or cost baselines, negative or positive risk is present.
  • Roles and Responsibilities for Risks Identification. The Identify Risk process is led by the project manager and involves project team members. External subject matter experts and other stakeholders can help during the project, but the primary input in this process should come from the project team members, experienced in doing the work and in the uncertainties associated with it.
pmp 2018 project risk management tips pmbok guide 6th edition main tipsographic

Project Risk Management Tips

by Project Management Process Group

1. Plan Risk Management


2. Identify Risks


  • Structure of Risk Statements. In the risk register, a risk statement always starts with the risk cause and then defines the risk effect.
  • Triggers. Warning signs or low-priority risks not listed as one of the risk register elements until the Plan Risk Responses process is carried out. A project manager includes them on a watch list during Identify Risk process and monitors periodically if they need escalation to the risk register.
  • Uncertainty or Estimate. Whenever the PMP exam mentions the words “uncertainty” or “estimate” – for PMP example, in questions on time or cost baselines, negative or positive risk is present.
  • Roles and Responsibilities for Risks Identification. The Identify Risk process is led by the project manager and involves project team members. External subject matter experts and other stakeholders can help during the project, but the primary input in this process should come from the project team members, experienced in doing the work and in the uncertainties associated with it.

3. Perform Qualitative Risk Analysis


  • Categorizing Risk by Root Cause Vs. by Effects. It is recommended to group identified risks by root cause instead of risks effects.
  • Delphi Technique Vs. Brainstorming. Delphi technique asks experts – team members or not – to give their opinion anonymously, and then the project manager evaluates those opinions. Brainstorming is project manager and project team in a room, thinking about the risks.
  • Priority Vs. Urgency. Priority tells you how important a risk is, while urgency tells you when you need to deal with it.
  • Probability and Impact Values. Defined during the Plan Risk Management process and documented in the risk management plan.
  • Qualitative Risk Analysis Subjectivity. Qualitative Risk Analysis is based on subjective evaluation of the risks included in the risk register.
  • Standard Risk Rating System. In light of the subjective nature of Perform Qualitative Risk Analysis, organizations need a standard risk rating system to promote a common understanding of what each risk rating means and replicate the risk rating process between projects.
  • Urgent Risks. In case of urgent risks, a project manager may skip quantitative risk analysis and move them straight into risk response planning.

4. Perform Quantitative Risk Analysis


  • EMV Vs. Decision Tree Analysis. Both tools calculate risk costs in a very similar way, but EMV uses numbers, whereas decision tree analysis uses a diagram.
  • Monte Carlo Analysis. For the PMP exam, you only need to know that it is a statistical and mathematical method to model out random data on possible risks on the project using a software.
  • Occurrence of Costs in Decision Trees. A decision tree models all the possible choices to resolve an issue. Thus, costs can occur anywhere in the diagram, also early or in the middle of the project, not just at the end.
  • Opportunities and Threats in EMV Analysis. Opportunities are usually expressed as positive values. Threats are expressed as negative values.
  • PERT Equation. The PMP exam uses the PERT (Program Evaluation and Review Technique) equation. That equation is (optimistic + 4 (most likely) + pessimistic) / 6
  • pmp 2018 rapid review free online course tipsographicQualitative Risk Analysis Vs. Quantitative Risk Analysis. Qualitative risk analysis is a subjective evaluation and, quick and cost effective, it is required for all projects. Quantitative risk analysis is a more objective or numerical evaluation and, slower and more expensive than its qualitative counterpart, it is usually reserved for the mega-projects and/or on those risks that are identified as having a higher probability and impact on the project.
  • Categories of Quantitative Tools. 3 categories of quantitative tools:
    • 1. Tools to get more information about risks – data gathering and representation techniques –
      • Interviewing
      • Probability distribution
    • 2. Tools to help you analyze the information you have – quantitative risk analysis and modeling techniques
      • Sensitivity analysis
      • Expected monetary value analysis
      • Modeling and simulation.
    • 3. Tools to help you put it all together – expert judgment.

5. Plan Risk Responses


  • Active Acceptance Vs. Passive Acceptance. Active acceptance develops risk responses to be implemented in case of risk occurrence – contingency plans –  and allocates a buffer time and/or budget to the project – contingency reserves. Passive acceptance does nothing and deals with the risk only if it arises –workarounds.
  • Avoid and Mitigate Vs. Transfer and Accept. High-priority, high impact risks require avoidance and mitigation as risk response strategies. Low-priority, low-impact risks call for transference and acceptance.
  • Contingency Reserves Vs. Management Reserves. Contingency reserves target “known unknowns” identified in risk management. Management reserves deal with “unknown unknowns” a project manager did not or could not identify in risk management.
  • Situational Questions on Major Risks. On the PMP exam, you should choose the answer that implements a contingency plan over the option that presents possible solutions after the problem has occurred.

6. Implement Risk Responses


7. Monitor Risks


  • Assumption Reassessment. Besides the risk register, a project manager needs to review the assumption log. The process of reassessing project assumptions tracks new assumptions, verifies existence and validity of existing factors, and closes assumptions no more true, real, or certain.
  • Flow of Work Performance Measurements. Work performance data becomes work performance information, which turns into work performance reports.
  • Reallocation of Reserves Not Used. A project manager must return time and cost reserves associated with identified risks that did not occur to the company, rather than use them on other issues arising from the same project.

Click here for a detailed analysis of each project management process group and knowledge area.

SOURCES: Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th ed. Newtown Square: Project Management Institute.

pmbok 6th edition, pmp training classes, pmp training cost, pmp training course, pmp training in hyderabad, pmp training institute, pmp training online, pmp training program, pnp certification, ppm project management certification, program management certification courses, program manager certification pmp, project management bootcamp, project management cert, project management certificate program, pmp 2018.

Recommended for You

  •  
  •  
  •  
  •  
  •  
  •  

Project Management Glossary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z



“PMP”, “PMBOK”, “PMI-ACP” and “PMI” are registered trademarks of the Project Management Institute, Inc. All rights reserved.

project management 2018 agile 2018 pmp 2018 tipsographic stefania

Hi, I am Stefania, hearth and keyboard behind Tipsographic, a free online resource for everybody interested in project management and agile. I specialize in project management tips, tools, and tricks. When I'm not writing, you can find me road cycling around Tuscany or spending time with friends and family.

Welcome to Tipsographic!