Comment:As we saw, formats can vary.Most focus on negative risk. Some, oneCOSO example, also addressed positiverisk/opportunity.Yet another COSOexample demonstrated the ability toincrease the information depicted by using“dots” of varying size to not only suggestthe probability – likelihood relationshipbut also the rate of onset of the riskshown.That could be a critical factor inthe choice of risk reactions and selectin oftrigger events.Quantitative RiskAnalysisDetermining risk by analyzing data,performing simulations, etc.It is usually performed along with orafter qualitative risk analysis. Thereare 3main types of quantitative riskanalysis:Decision Tree: analyze the expectedmonetary value of different optionsComment:As you note, EMV is simply aweighted average of possible negative andpositive outcomes.Simulation: Specifically, a Monte CarloAnalysis. Run the situations hundredsto thousands of times to analyzewhere risk is present, then creates astatistical distribution of differentoutcomesSensitivity analysis:Needs fancycomputer software and algorithms.Change certain variables and thenanalyze how those affect the risk oftasks.Comment:the quantitative methodsdiscuss are really extensions of qualitative.The goal for all is deep understanding ofrisk (probability of occurrence and impact)sufficient to allow intelligent prioritization.<Added> TriggerA trigger is an event or series of eventsthat provide that a warning or indicationthat an identified risk may be emerging.The indication(s) should trigger theplanned risk response.Comment:These can but do notnecessarily trigger the risk, but rather therisk response.
Risk ResponsePlanningRisk response planning involvesdeciding how to respond to identifiedrisk.Responding to risk is not onlyimportant to reduce the negativeimpact risk has on a company orproject team, but it allows greaterexploitation of positive riskopportunities.Negative risk, whichcan be accepted, avoided, mitigated,and transferred, is inherently bad fora company.Learning how to deal withthese risks, and possibly turning adire situation into a minor setback isinvaluable for all project managementsituations.Knowing strategies fordealing with said risk ahead of time iskey for planning purposes, as well asgiving the PM the confidence to dealwith them, and the knowledge abouthow to plan around them in thefuture.Positive risks on the otherhand should be utilized and exploitedin order to help the company whenthe situation come about.Knowinghow to exploit them to the fullestextent, and how to tie them into aproject plan is vital for a PM tounderstand for future projectplanning.Negative risks must bemanaged and worked around if a PMis truly competent, and positive risksmust be exploited to their fullestextent - these strategies must beunderstood by a successful projectmanager.
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