Enterprise Project Management Office State of North Dakota Risk Management Plan Project Name: Agency: Project X Agency ABC LMN Division Business Unit/Program Area: Project Sponsor: Project Manager: Date: 08/21/08 Nancy W Joe P Version: 1. 5 Risk Management 1. 1. 1. INTRODUCTION Purpose and Objectives Risk Management is the systematic process of identifying, analyzing, and responding to project risks.
It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives. A risk management plan defines how a project team will handle risks to achieve that goal. 2. RISK-RELATED DEFINITIONS There are a number of terms used in risk management that need we need to define to ensure clear communications. 2. 1. Risk An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.
Risk is often a measure of the inability to achieve overall project objectives within defined project requirements and constraints and has three components: (1) the probability of occurrence, (2) the impact of the risk on the program, and (3) the time horizon during which the consequences will occur if the risk is not mitigated. Page 1 of 12 Enterprise Project Management Office State of North Dakota Sample Risk Management Plan 2. 2. Probability of Occurrence The following table defines the probability of occurrence. Table 1 – Risk Probability of Occurrence
Probability range 91% through 99% 61% through 90% 41% through 60% 11% through 40% 1% through 10% Natural language expression “Very likely” to occur “Probably” will occur “May occur” about half of the time “Unlikely” to occur “Very unlikely” to occur Probability value used for calculations 95% 76% 51% 26% 5% Numeric score 5 4 3 2 1 2. 3. Risk Impact The following table defines the risk impact categories and terms. For positive risks, consider the opposite of the impact description. The examples would remain the same except having a positive impact to the project.
Table 2 – Risk Impact Impact Description An event that, if it occurred, would cause project failure (inability to achieve minimum acceptable requirements) An event that, if it occurred, would cause major cost/ schedule increases. Secondary requirements may not be achieved. An event that, if it occurred, would cause moderate cost/ schedule increases, but important requirements would still be met. Example * schedule adjustment >2 mo cost impact > 40% schedule adjustment >1 mo cost impact >20% schedule adjustment > 2wks cost impact > 10%
Natural language expression Impact value used for calculations Numeric score Critical Cost of variance 10 Serious Cost of variance 8 Moderate Cost of variance 5 Page 2 of 12 Enterprise Project Management Office State of North Dakota Sample Risk Management Plan An event that, if it occurred, would cause only a small cost/schedule increase. Requirements would still be achieved. schedule adjustment > 1wk cost impact > 5% schedule adjustment < 2d cost impact