Risk Reassessment and Risk Audits

In this chapter, we are going to look at two of the tools and techniques in the monitor and control risks process, namely – Risk Reassessment and Risk Audits.

Risk Reassessment

The word reassessment is something that you would’ve heard frequently in real life. The meaning of Risk Reassessment is in the same lines as the literal meaning/purpose of the word and focuses on Risks specifically.

There are three aspects of Risk Reassessment that you must remember for the RMP Exam. They are:

1. Identifying New Risks
2. Closing Risks that are no longer applicable
3. Keeping tab on existing risks to figure out if any further action is required

Points 1 & 2 are pretty self-explanatory. Point 3 is where a bulk of the action is. We will keep checking if the impact and/or the probabilities of risks are the same now (As compared to when they were planned before). The level of impact of a risk or its probability could change when project execution begins. Even some risks that are in the watchlist could have changes to their probability and/or impact. In such cases, we take these risks through the risk management cycle and then formulate a response. The whole idea is to reassess and re-strategize those risks where we feel our existing response strategy may be inadequate.

Trivia:

When a new risk is identified during this process, we take that risk through the full risk management cycle in order to formulate a response strategy for the newly identified risk.

As the project progresses:
• The probability of a risk occurring comes down
• The impact of the risk (if it occurs) goes up

Remember the chapter on Risk & Uncertainty titled Managing Uncertainty? Risks always move with uncertainty. The greater the uncertainty, the greater the risk. So, as the project moves forward and more and more work gets completed, the uncertainty comes down and so does the likelihood of the risk materializing.

Projects vary and not all projects are similar. So, when we do this risk reassessment activity too would vary from case to case. As a general rule of the thumb, risk reassessment should be scheduled regularly, especially where projects have schedule or cost slippages. The whole idea here is to reassess the situation to take remedial actions to bring the project back on track.

Risk Audits

Risk Audits is another tool and technique that we use during the monitor and control risks process. It is also part of the overall process improvement of the project.

Risk Audits are concerned with:
• Measuring the effectiveness of the risk responses
• Measuring the effectiveness of the risk management processes in the project

When we perform Risk Audits, we examine the risk responses (that were implemented) to determine if they were effective in handling the risks and their root causes. The output of this audit is always documented. Similarly, we can also audit and gauge the effectiveness of the risk management processes in the project as a whole too.

The idea behind these kinds of activities is to be more proactive than be reactive. We are constantly trying to refine and improve our processes and efficiency and this risk audit can greatly help the risk management practices in not only the project but also the whole organization as well (If we properly capture the results of our audits and create lessons learned documents)

It is the responsibility of the Project Manager to conduct periodic risk audits. How frequently risk audits happen, who does them, and how the output is captured etc. is specified in the risk management plan. Typically risk audits are scheduled at significant project milestones. For smaller or low-complexity projects, we can even take up risk audit as a onetime activity towards the end of the project.

Steps in Risk Audit:
a. Identify who will participate
b. Follow the risk audit specifications documented in the risk management plan
c. Collect, analyze and document all relevant information
d. Use recommendations to improve the process

As we conduct the audit, the participants may have several questions. All these questions will help us measure the effectiveness of the response that was implemented. In order to achieve maximum benefits out of this activity, all the participants must be in the same page before the meeting and understand the project clearly.

Prev: Overview of Tools & Techniques used in Monitor & Control Risks

Next: Workarounds and Reserve Analysis

Overview of Tools & Techniques used in Monitor & control Risks Process

The monitor and control risks process is instrumental in the success or failure of a project. You may have come up with elaborate and comprehensive plans to handle risks in your project but, if you do not monitor your risks and take controlling actions as required, all your planning effort isn’t worth even one penny. So, every good project manager has to ensure that he/she spends adequate time and effort in this process to reap the best rewards for the project.

There are a total of 6 tools and techniques that we will be using in this process. They are:

• Risk Reassessment
• Risk Audits
• Variance and Trend Analysis
• Technical Performance Measurement
• Reserve Analysis
• Status Meetings

There will be no need to reassess or audit risks if the actual project execution hasn’t started. So, as of now the project status is the same as what we had at the end of the Planning phase and hence none of the risks or their statuses would’ve changed. In fact, the other processes too may not add much value to the Project’s Risk Management if we haven’t entered the Project Execution Phase. All of these processes analyze the risk related data that is available with us now. So, unless we actually start executing project work, the data is not going to be any different to warrant any analysis.

Variance and Trend Analysis uses Earned Value. Remember Earned Value? Though Earned Value isn’t an actual topic as part of the PMI RMP syllabus, it would be a good idea to revisit the following two chapters to refresh your memory:

a. Cost Management during Monitoring & Controlling the Project
b. Measuring Project Performance


The last and final point we will cover as part of this introductory chapter on the tools and techniques used in Monitoring and Controlling risks process is about “Workarounds”. Almost all junior PM’s and even some senior ones easily confuse workarounds with contingency or fallback plans. Remember that workarounds happen during the monitor and control phase of the project while contingency or fallback plans are created during the planning phase itself.

Armed with all the information above, we are now ready to dive into these tools and techniques in detail. Note here that, in the following chapters we will be covering Workarounds as well as some Estimation techniques and Cost Benefit Analysis. Though these aren’t explicit tools and techniques in this process, they are part of the exam syllabus and will be useful in real life too.

Prev: Inputs to Monitor & Control Risks

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