LESSON 6-1: Risk Overview

This tutorial describes:
• Critical risk management tasks for successful project management; and the types of project risks
• Activity Uncertainty
• How to apply Activity Uncertainty
• Risk Events and how they are managed in the risk register
• Risk Types: Threat, Opportunity and Weather
• How to run Risk Analysis
• The displayed Distribution Results, Mean Impact and Risk Removal Impact

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1. Critical factors for successful project management.
Every project is exposed to risk. Learning to identify risks, recognizing their potential impact, and devising effective response strategies are critical for successful project management. There are two types of project risk, activity uncertainty and risk events.

2. Activity Uncertainty. 
Activity uncertainty refers to the difficulty of predicting how long it will take to complete any project activity. Experienced project managers can estimate about how long an activity will take. But they can't predict it exactly. Activity uncertainty is accounted for by assigning a range of durations to each activity.

3. Apply Activity Uncertainty.
Click apply activity uncertainty to add minimum, most likely, and maximum duration values to each activity. Values are based on the activity's remaining duration. The other type of project risk, risk events, are managed in the risk register.

4. Risk Event - managed in the Risk Register.
Type a risk. And then select the risk's probability, its impact on the project schedule, and its impact on project cost. The risk register uses a risk matrix selected and configured by an administrator. The matrix uses probability and schedule and cost impact thresholds to quantify risk impacts.
Based on the threshold selected, the risk register generates a score for each risk. In the risk detail windows, type response actions for a risk, fine-tune probability and risk impacts, map risks to specific activities, and assign files and codes. Let's add another risk.

5. Risk Types – Threat, Opportunity and Weather.
Default risk type is threat. This applies to any potential event that can disrupt the project. But some events can actually help a project. Being able to reuse previous design work, for instance. Such an event can be categorized as an opportunity.
And the third risk type is weather. The impact thresholds become inactive when the weather risk type is selected. That's because weather events are modeled as working time uncertainty. During defined weather periods, you'll specify a time period and then estimate the probability that it will be impossible for work to be done during that period.
When the weather risk type is selected, the weather detail window becomes active. Click add to define a weather period for the risk. Select a period start and finish date. Now, enter an estimate of non-working days for the period. Enter them as a distribution or as a percentage.
In the nonworking percentage column, enter the probability that any particular day during the period may be a non-working day. Persistence is a weather modeling concept that defines the probability of a non-working day immediately following another non-working day.
In the nonworking percentage column, enter the probability that any particular day during the period may be a non-working day. Persistence is a weather modeling concept that defines the probability of a non-working day immediately following another non-working day.

6. Risk Analysis.
Finally, assign the risk to the activities it may affect. After applying activity uncertainty and entering project risks, you're ready to run an analysis. Choose one of three preconfigured analysis levels. Fast, normal, or comprehensive. Or run a custom analysis by setting your own options.
When you run a risk analysis, the project schedule is simulated thousands of times using a random sampling of the activity uncertainty and risk impact values. The outcomes then undergoes statistical analysis, and the results are displayed in a variety of charts.

7. Distribution Results.
The distribution results histogram displays a breakdown for project and activity cost, duration, and start and finish dates. It tells you what your chances are of hitting your plan finish dates or staying within your budget. It also highlights costs and dates that are more likely to be achieved.

8. Mean Impact.
The mean impact tornado charts display the average impact of each risk and project activity on project cost and duration. Click show contribution breakdown to see which risks contribute the most to an activity's delay or additional costs. The risk removal impact tornado charts focus more closely on the impact of each risk on project finish date and cost.

9. Risk Removal Impact.
Use the response context list to display pre or post response data in any of the charts. Comparing pre and post response analysis results helps you assess your risk response efforts and identify risks where those efforts could be strengthened. 
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