Risk Management

Simplilearn Solutions
Managing Successful Programmes

Risk and Issue Management
1
MSP is a registered trade mark of AXELOS Limited
Agenda

MSP framework Risk and issue management
Risk and issue management Introduction
Potential sources for identifying risks
Managing risks in a programme
Risk management framework
Issues
Issue management framework
Change control
Configuration management
Risk and issue management within transformational flow
Roles and area of focus
Information Risk and issue management
2
MSP Framework
Key
Inner
Circle
Second
Ring
Outer
Ring
Transformational
Flow
Crown copyright 2011. Reproduced under licence from AXELOS Limited.
Governance
Theme
Principles
Remaining aligned with
corporate strategy
Programme
Organisation
Closing a
Programme
Defining a
Programme
Identifying a
Programme
M
a
n
a
g
i
n
g

t
h
e

T
r
a
n
c
h
e
s

Delivering
the
Capability
Realising
the
Benefits
3
Risk and Issue

Risk
Uncertain event which, if occurs, will affect achievement of
objectives.
Risk can either be negative (threat) or positive (opportunity).
Each identified risk should have cause, event and effect.
Issue
Events that have happened, were not planned and need
management actions.
Risks, should they occur, become issues.
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Potential Sources for Risks
Benefits management, transition activities, costs, scope and timescales
Dependencies, constraints, assumptions, quality of operations, resources
and programme deliverables
Anything that cannot be resolved by the project, or issues common to
more than one project
Stakeholders, organisation, programme staff and third parties
Degradation of operational performance staff and third parties
Degradation of operational performance beyond acceptable levels
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Risk Management Perspectives
Driven by external factors, inter-programme dependencies and internal political
pressure
Strategic level
Driven by projects, lack of direction, complexity of outcomes, resource availability, etc.
Programme level
Arises from resource constraints, scheduling, scope creep and being non-aligned with
programme
Project level
Arises from need of creating balance between operation stability and implementing
new capabilities
Operational level
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M_o_R risk management principles
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Aligns with Objectives
Fits the context
Engages stakeholders
Provides clear guidance
Informs decision making
Facilitates continual improvement
Creates a supportive culture
Achieves measurable value
Managing Risks in a Programme
Risk
management
strategy
Risk appetite
Tolerance
thresholds
Assumptions
Early-warning
indicators
Risk register
Threat and
opportunity
Evaluating
risks
Risk
aggregation
Proximity
Progress
reporting
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Risk Management Strategy
Risk Management
Strategy
Project assumptions
Information flow
Organisations risk
policies and
processes
Risk management
process of
programme
Risk appetite
How opportunities
will be managed?
Benefits
management
Interfaces
Clarifies
Defines
Reflects
Reviews
Clarifies and
explains
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Risk Appetite and Tolerance Thresholds
Risk appetite:
Amount of risk that an
organisation is willing to
accept. This helps in
defining the tolerance
levels.
Tolerance thresholds:
Thresholds translate risk
appetite into guidelines that
steer programme and
project behaviour.
10
Assumptions, Early Warning Indicators and
Risk Register
Assumptions:
Assumptions define the
boundary of
programme/projects in
business case.
Assumptions are result
of uncertainty and
should be treated as
sources of risk.
Review project
assumptions at
programme level.
Early warning
indicators:
These indicators provide
advance warning of
trends or events that
could adversely affect
the programmes
outcomes.
Can be used to track
sensitive risks.
Risk register:
Repository used to
capture information
about risks in a
consistent and
structured manner.
Risk management
strategy defines content
and purpose of risk
register.
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Threats and Opportunities
Risks are normally threats (negative impact) to programme but some risks actually
provide opportunities (positive impact) to improve programmes outcomes.
Same event can have different impact on different constituent projects. Also,
aggregation of threats or opportunities at programme level may change resulting
effects again.
There can be multiple triggers for a single threat or opportunity.
Differentiate between threat and opportunity to focus on risk response.
Risk management and benefits management can overlap in a scenario where an
opportunity becomes a potential benefit.
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Evaluating Risks
Risk will potentially impact the programmes cost, time and benefits
Impacts can be shown in the form of probability impact grid, giving criteria to
each level within scale (very high to very low).
Expected value is a way of estimating the financial exposure of risks by
discounting the total cost of their impact against probability of their
occurrence.
The other methods that can be used are estimated monetary value calculation or
net present value calculation.
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Risk Aggregation
Risks can be interdependent and have
cascading effect. It can grow and
accumulate to critical mass.
Prepare summary risk profile which
provides visual explanation of aggregations
and interdependencies.
To manage aggregation, programme
manager should be aware of level of risk
impact on each operation/project.
Cost of contingency needs to be planned.
Mitigation plan should be prepared to
minimise the risk.
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Probability Impact grid &
Summary Risk profile
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Proximity and Progress Reporting
Proximity:
Informs the management
when a risk will occur in
future.
Helps management realise
the impending urgency of
the risk.
Progress reporting:
Monitors the evolution of
risk exposure.
Acts as an independent
report aimed to monitor
overall risk and issue
trends across the
programme.
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Risk Management Framework
Understand scope,
objectives,
assumptions,
stakeholders and
internal & external
environment
Identify risks and enter
them in risk register
Identify
Estimate the threats
and opportunities in
terms of probability,
impact and proximity
Evaluate net
aggregated effect of
identified risks
Assess Prepare specific
management responses
to threats and
opportunities
Analyse the impact of
residual risk as well
Plan
Ensure that planned
actions for managing
risks have been
implemented
Risk owner and risk
actionee should be
identified in advance
Implement
Effective communication is
key to identification of new
threats and opportunities
Implementation of risk
management is dependent
on good communication
Ensures risk management
strategy is appropriately
followed
Controls the process with
reviews and health checks
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Communicate
Embed &
Review
Issues
Issue is a relevant and unplanned event that requires management action to
prevent or reduce its impact on programme
Issues can emerge from constraints identified at the outset of a programme
It can come from stakeholders
Issues can be generated by participating projects or operations
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Threat and Opportunity
Responses
Options Use
Avoid Remove cause of threat
Reduce
Reduce the probability/impact of
threat
Transfer
Pass part of risk to third party, like
insurance
Share
Seek multiple parties to share the
pain
Accept Decision to allow risk to happen
Contingency
plans
"We will accept risk for now but we
will make a plan on what we'll do if
situation changes"
Options Use
Exploit
Increase and strengthen cause of
opportunity
Enhance Maximise an opportunity
Share Share the gains
Accept
Decision to allow opportunity to
come
Transfer
Opportunity shared with third
party for a different kind of gain,
like earning reputation or better
relations
Contingency plans
Fall back plan as plan to exploit
an opportunity may not succeed
THREAT
OPPORTUNITY
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Issue Management Framework
Capture
Analyse issue that has been
raised
Categorise issue and assess
the severity and impact
Examine
Examine the issue by impact
analysis
Impact analysis should cover
programme, projects,
objectives, blueprint and
operations
Propose course of action
Consider all options and
choose the most effective
one
Decide
Issue management strategy
defines who has the authority
to take decisions about
changes
Plan the change with
appropriate contingency
Implement
Implement the change
Communicate decision and
response action to all
stakeholders
Update issue register
Record lessons learnt
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Issue Management Strategy and
Issue Register
Issue management strategy:
Describes programmes approach
to issue management
Outlines how issues will be
identified, categorised, severity-
rated and managed
Change control procedure will be
defined by issue management
strategy
Issue register:
Created in defining a programme,
to record issues
Includes former risks that have
materialised
Shape, content and purpose
defined in issue management
strategy
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Change Control
Capture the change and define why it is needed
Allocate priority to indicate urgency
Assess the impact
Analyse all options and test potential solutions
Authorise agreed solution
Implement the change and monitor the effects
Review effectiveness
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Configuration Management
Planning:
Decide what level of
configuration
management is
appropriate based on
blueprint
Identifying:
Identify all assets for
which configuration
management is required
Controlling:
Version control changes
in configuration
document along with
other documents
Status accounting:
Maintain current and
historical information
concerned with each
configuration
Verifying:
Audit the programme to
ensure there is
conformity between
expected and actual
status
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IDENTIFYING A
PROGRAMME
Risk management focused on identifying and clarifying ambiguity.
Programme brief will include an initial set of programme risks and
issues.

ASPECTS OF RISK AND ISSUE MANAGEMENT

DEFINING A PROGRAMME
Risk management and issue management strategies are created.
Risk and issue register are set to record risks and issues respectively.
New risks and issues are captured.
MANAGING THE
TRANCHES
Implements defined governance arrangements for risk and issue
management.
TRANSFORMATIONAL
FLOW
Risk and Issue Management within
Transformational Flow
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DELIVERING THE
CAPABILITY
Project briefs contain guidance on risk and issue managements.
Aggregated risks from projects are a major concern.

ASPECTS OF RISK AND ISSUE MANAGEMENT

REALISING THE BENEFITS
Helps avoid failure.
If any tranches deliver below expectation, this is treated as issue.
CLOSING A PROGRAMME
If a programme is closed prematurely, it is due to major risks and
issues that cannot be managed by programme.
TRANSFORMATIONAL
FLOW
Risk and Issue Management within
Transformational Flow (Contd.)
25
Roles and Area of Focus
Role Area of Focus
Authorises the risk management strategy and issue management
strategy and its enhancements
Intervenes to control risks and issues
Initiates assurance reviews of risk and issue management effectiveness
Ownership of strategic risks and issues, ensuring mitigation actions are
dealt with, at appropriate senior level
Senior Responsible
Owner (SRO)
Develops and implements strategies for handling risks and issues
Designs and manages the risk and issue management cycle
Manages the aggregated levels of risks and issues
Assures programme adherence to risk management principles
Allocates risks and issues as appropriate
Ensures that change control is correctly authorised
Programme Manager
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(Contd.)
Ensures that impact of individual and aggregated risks is understood by
relevant stakeholders
Defines clear rules for escalation, cascade and threshold
Ownership of programme level risks and issues
Deploys a consistent language for risk management across all projects
Communicates the progress of resolution of issues in a clear and timely
fashion
Escalates items that cross programme boundaries to SRO for resolution
Designs and implements configuration management system
Programme Manager
Manages and coordinates the resolution of risks relating to operational
performances and benefits achievement
Ensures risk management cycle includes operational risks
Manages risks that impact on business performance and transition
Business Change
Manager
Role Area of Focus
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(Contd.)
Identifies operational issues and ensures that they are managed by
programme
Identifies opportunities from the business operations and raises them
for inclusion in the programme
Contributes to impact assessments and change control
Monitors and reports on business performance issues that may require
attention of programme during transition
Business Change
Manager
Manages and coordinates the information and support systems to enable
efficient risk and issue management
Maintains the programme risk and issue register
Establishes, facilitates and maintains risk and issue management cycle
Provides support and advice on risks and issues to projects
Coordinates risk and issue management interfaces with projects
Maintains the configuration management systems
Facilitates change control steps
Programme Office
Role Area of Focus
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Risk Management Strategy
Purpose:
Defines programme approach to risk management
Content:
Roles and responsibilities for managing risk in programme
Process adapted from organisations risk management standards
Interface with benefits management strategy on approach to managing opportunities
Scales for estimating probability and impact along with criteria for each level
Guidance on calculating expected value and proximity
Risk response categories including threats and opportunities
Risk templates including risk register
Early warning indicators
Timing of risk management activities and information flow and reports
Criteria for escalating risks and assessing effectiveness
Risk management standards
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Risk Register
Purpose:
Used to capture and actively manage risks for programme
Content:
Risk identifier Unique risk id, description of risk (cause, event and effect)
Categorization (threat or opportunity), probability and proximity of risk occurring and its impact
on the programme
Description of proposed risk response and residual risk after it has been implemented
Risk actionee Individual responsible for the implementation of risk
Risk owner Responsible for management and control of risk assigned to them
Current status of risk and progress of any action related to risk
Cross reference to programme plan to identify where risk response has been scheduled
30
Issue Management Strategy
Purpose:
Describes mechanisms and procedures for resolving issues
Content:
How issues will be identified, captured and assessed
How issues will be managed across programmes, projects and operations
Responsibilities for effective management and issue resolution
Process and explanation of how change control will work in programme
Change control procedures for authorising changes resulting from issues
Procedures for implementing and controlling the changes
How exceptions beyond tolerance levels will be managed
How responses to issues will be identified and by whom
Criteria for dividing issues between project and programme and allocating severity ratings
Other strategies used to support issue management strategy
Monitoring and evaluating mechanism for issue response
31
Issue Register
Purpose:
Used to capture and actively manage programme issues
Content:
Unique reference for each issue raised along with date, who raised the issue and description
Description of cause and impact of issue
Severity rating and categorisation
Description of issue response action to be undertaken and by whom
Issue owner Responsible for management and control of issues
Issue actionee Individual responsible for implementation of given issue response action,
progress and status update
Cross reference change control procedure, if applicable
Description of how issue was resolved and lessons learnt
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Risks are present at each level of organisation and in each phase of programme. Risk can
either be a threat or an opportunity.
Risk management strategy describes an approach to risk management which reflects
programmes unique objectives. Each organisation has its own risk appetite and
tolerance thresholds which governs the risk responses.
Issue is a risk that has happened. Issue management strategy is similar to risk
management strategy in approach and provides clear guidance on how issue will be
managed across the board.
Change control puts measures in place to ensure all required changes go through
proper levels of check and impact analysis.
Configuration management controls the development and changes to items that are
important to programme. It specifies how the individual configuration items fit together.
Summary
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Question One
In a programme, a response action to an issue impacts the operational area.
Who is the best person to be involved with implementing the change?
a) Programme manager
b) Project manager
c) Appropriate BCM
d) SRO
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Question One
In a programme, a response action to an issue impacts the operational area.
Who is the best person to be involved with implementing the change?
Answer: c) Appropriate BCM
Explanation: BCM comes from operational sections and thus is the
best person to manage the change.
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a) Programme manager
b) Project manager
c) Appropriate BCM
d) SRO
Question Two
Which is not an accepted method of handling an opportunity?
a) Exploit
b) Reduce
c) Transfer
d) Share
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Question Two
Which is not an accepted method of handling an opportunity?

Answer: b) Reduce
Explanation: Opportunity should be enhanced not reduced. Threats
are reduced.
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a) Exploit
b) Reduce
c) Transfer
d) Share
Question Three
a) True
b) False
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State whether True or False. Share the risk means we can have an insurance where
insurer picks up risk cost and insured retains the impact on other objectives.
Question Three
State whether True or False. Share the risk means we can have an insurance where
insurer picks up risk cost and insured retains the impact on other objectives.
Answer: b) False
Explanation: Above example is of transfer the risk.
40
a) True
b) False
Question Four
Which document shows the interactions between critical risks?
a) Risk register
b) Risk management plan
c) Risk strategy
d) Risk profile
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Question Four
Which document shows the interactions between critical risks?

Answer: d) Risk profile
Explanation: Risk register is a risk repository but it does not show inter-
dependencies. Risk management plan and risk strategy are governance
arrangements. Risk profile shows the interactions between critical
risks.
42
a) Risk register
b) Risk management plan
c) Risk strategy
d) Risk profile
Question Five
a) Strategic level
b) Programme level
c) Project level
d) Un-manageable
Risks related to changes driven by external political, economic, social, legislative,
environmental and technical factors are:
43
Question Five
Answer: a) Strategic level
Explanation: These risks need to be managed at strategic level.
44
Risks related to changes driven by external political, economic, social, legislative,
environmental and technical factors are:
a) Strategic level
b) Programme level
c) Project level
d) Un-manageable
Question Six
a) Cost
b) Time
c) Benefit
d) All of the above
Select right option for the following sentence:
Risk will potentially impact programmes:
45
Question Six
Answer: d) All of above
Explanation: Risk might impact more than one aspect of programme.
Select right option for the following sentence:
Risk will potentially impact programmes:
46
a) Cost
b) Time
c) Benefit
d) All of the above
Question Seven
a) Proximity
b) Tolerance
c) Aggregation
d) None of the above
Which term reflects the fact that risks will occur at particular times in future?
47
Question Seven
Answer: a) Proximity
Explanation: Tolerance is related to risk appetite of organisation and
aggregation represents the situation when we are combining the
effects of risk. Proximity reflects the fact that risks will occur at
particular times in future.
48
Which term reflects the fact that risks will occur at particular times in future?
a) Proximity
b) Tolerance
c) Aggregation
d) None of the above
Question Eight
a) Risk management strategy
b) Issue management strategy
c) Risk aggregation
d) Risk threshold
Consider currency exchange rates. The future movement of these rates can have an impact on
individual projects, but the accumulated effect is often only visible at the higher programme
level. This explains:
49
Question Eight
Answer: c) Risk aggregation
Explanation: Aggregation represents the situation when we are
combining the effects of risk.
50
Consider currency exchange rates. The future movement of these rates can have an impact on
individual projects, but the accumulated effect is often only visible at the higher programme
level. This explains:
a) Risk management strategy
b) Issue management strategy
c) Risk aggregation
d) Risk threshold
Question Nine
a) Capture
b) Examine
c) Propose course of action
d) Identify
Which one of the following is not a step in issue management framework?
51
Question Nine
Answer: d) Identify
Explanation: Since issues have already happened, there is no
need to identify them.
52
Which one of the following is not a step in issue management framework?
a) Capture
b) Examine
c) Propose course of action
d) Identify
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