{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Risk Analysis-I - Project Management A Managerial Approach...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Project Management A Managerial Approach Risk Analysis
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This chapter- Theoretical aspects of risk Types of risk  Risk Management process Hillier model Certainty equivalent approach Risk adjusted discount rates Sensitivity analysis Game theory  Monte Carlo simulation (already covered)
Background image of page 2
Risk Versus Uncertainty Analysis Under Uncertainty - The Management  of Risk The difference between risk and uncertainty Risk  - when the decision maker knows the  probability of each and every state of nature and  thus each and every outcome.  An expected value  of each alternative action can be determined Uncertainty  - when a decision maker has  information that is not complete and therefore  cannot determine the expected value of each  alternative
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Involved at all stages of project management What is risk?an event about which we are uncertain  and the possibility of the result is unfavourable. If it is favourable, it turns out to be an opportunity. PROJECT RISK is the cumulative effect of the chances of  an uncertain occurrence adversely affecting the project  objectives. Or, the degree to which project objectives are  exposed to negative events and their probable  consequences, as expressed in terms of scope, quality,  time & cost. Risk
Background image of page 4
Types of risk  1. Project –specific risk-  the earnings & cash flows of  the project may be lower than expected due to an  estimation error or lower quality of management  2. Competitive risk -the earnings &  cash flows  of the  project may be effected by some unanticipated  actions of the competitors  3.  Industry -specific risk-unexpected technological  developments & regulatory changes that are  specific to the industry to which the project  belongs ,will have an impact on the earnings &  cash flows of the project as well
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4.  Market risk-unanticipated changes in macroeconomic  factors like GDP growth rate, interest rate, inflation etc. have  an impact on all projects in varying degrees. 5. International risk-in case of foreign projects exchange rate  risk /political risk may effect cash flows. An evaluation of potential risks can show at an early stage  whether or not a proposal is worth pursuing. The risks can be 1) the project will fail completely 2) The project will be compromised on time, cost or both.
Background image of page 6
Contingency Plans  to tackle significant risk situations  should surface in the project proposal.  Formal use of risk  analyzing techniques may be required. 
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}