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Lecture 1RISK Culture1Risk ThinkingWhat make us to think for a risk:Is it a backward thinking or forward thing?Will it allow us to grow and progress or slow us down?

In Growth-oriented management cultures of the past, negative aspects were not mentioned.In those days, to reflect upon failure was a sign of failure.

2Risk ThinkingThinking of failure came into management paradigms through different avenues:

Fail safe product:The market demanded fail-safe product.Product forced to look at failure possibilities and came up with robust design. Developers should design a product with minimum risks. 3Risk ThinkingFinance Management:Risk became a investment question.Credit risk is studied, defined and measured religiously in finance institutions. Variation in ROI was a measure of risk, as old-age concept was Variation is trouble

Project Management:Risk consideration became a integral part of PM.Project managers saw risks clearly than anybody else.Managing a project implied living with risk around the clock.4What is Risk?The original meaning of a risk is gambling:to risk is to gambleTake risks is equal chance of gaining and equal chance of losing

Definition 1:Risk is a probability of suffering loss

Definition 2:Risk is a probability of suffering loss while pursing goals5What is Risk? Definition 3:Risk is the combination of probability and magnitude of loss

Definition 4:Risk is a probability of suffering loss while pursuing goals due to factors that are unpredictable or beyond6A boundary ProblemWhat is a Risk?Answer to this depends upon on who is answering it And the boundaries the individual establishes around himselfOwner Vs Non-owner

Internal Risks External Risks When an organization is divided more, more boundaries appears hence employees see more internal risk

When an organization is integrated, internal risk are called process management issues, collaborative efforts makeup for weakness.7Expressing RiskCultures are propagated through words, so Risk cultures also thrives on clear definition of risk terms.

Basic Terms:Risk IDRisk ProbabilityRisk ImpactRisk ExposureRisk OriginRisk CategoryRisk Owner8Expressing RiskAdditional Terms:Following may also be added in list to minimize risks,Risk CostRisk Cause

9Risk VocabularyIn building risk cultures, it is essential to :share the glossary with all decision makers And achieve common terms of reference

Will avoid differences in interpretations, because difference even if they are small, causes conflict and disagreement.

Each organization should publish its own definitions and make them known to all stakeholders. 10Risk Driven Project ManagementProject Visibility:Risk eclipse all project, more in case of Software projects.

With abstract work projects and indescribable results, are more vulnerable to risks.

So good road to visibility prevents accidents, So visibility in projects reduces risks

Process maturity improves visibility and minimize risks.11Risk Driven Project ManagementGoals Setting:Every goal is shadowed by risks, so when to define goals, must recognize risks too.

Risk sensitivity enhances goal clarity.

Great opportunities, that others missed, result in only by taking risks.

More knowledge less risks, and vice-versa.

Successful entrepreneurs are tuned with risks, they perceive risks and deal them.

12Risk Driven Project ManagementProduct Development:Product development companies are fearful about risks.Their Stakes & Investments are huge andSeveral risks threatens the product before it hits the market

Products may be scrapped prior to release becauseMarket for them may disappear Lack of right people for maintain product.If competitors launch product ahead of us, than we lost time and with it, no race.

Risk are carefully examined at every milestone in product development environment.

13Risk Driven Project ManagementDevelopment: Risk Driven approaches are known to pay rich Surplus but, Phase-end risk reviews and appropriate responses enables smooth sail.

Project team looks at risks, handle them, or escalate the risk to higher level involvement.

The evolutionary development model exposes risks clearly at every increments.Project reviews at increments are ideally suits to detect risks and acting at them14Risk Driven Project ManagementMaintenance:Maintenance projects needs risk management.Because they go through routine & repetitive bug-fixing cycle.

Risk management reduces cycle time and improves customer satisfaction.

Instead of Life-cycle based risk approaches, Calendar-based regular risk reviews are more useful. 15Maturity in Risk CultureAs the risk matures the paradigm shifts.

Previously known risk are attack in crisis management.With experience, internal risks are mitigate, and external risk are engaged in reasonable order.

Larger problems are solved using long-term strategies.It is the time when risks are exploited, they are solved & associated opportunities are seen with clarity. 16Maturity in Risk CultureWhen risk awareness is respected , there may be many risk owners.Because these employees own the risk as they affect their goals and objectives.

Decision Analysis practitioners take risk analysis in their pace.Considers risk & payoffs in decisions to make optimum & least harmful options.

Mature organization possesses prediction models, & risk forecasting became an obvious output.It also Stimulate variation and risks.

17Maturity in Risk CultureGrowth Architects of an organization hunts for opportunities;Their caution is risk prevention, hence risk perceiving & responding will pave path for growth.

An organization that doesnt see is blind & the one that doesn't respond to them are dead. 18Maturity in Risk Culture

Maturity Phases of Risk management Culture 19Maturity in Risk CultureMature risk cultures absorb an ability to perceive & solve risks with speed & energy.

The frequent sharing of risk information, exchange of success & failures in risk mitigation has a major significant that it cultivates a sixth sense of risk, from risk data to risk practices.

Risk cultures has power to see unknown risks, but maturity involves years of practices.20Preparing for RiskPeople:If starting for risk management, then prepare the organization for it.

All decision makers should have the common definition of risk & will interpret the meaning in identical manner.

Decision maker can be:Directors,Senior Managers,Project Leaders,Team Leaders,Engineers.

Begin the preparation with HR List and organization Structure.Make sure who should contribute to risk management and how.

21Preparing for RiskCommunication:Arranged list refers to the risk owners in your organization, as they are also decision makers.

Prepare the Risk management guidelines & circulate them.

All the identified decision makers have a common understanding of following:Risk Glossary,Risk Management,Risk management Benefits,Distinction between the risks and defects,Risk base project development,

22Preparing for RiskBody of knowledge:

Risk management is a knowledge based, so

Develop a risk body of knowledge and publish the best practices, resulting from risk mitigation.

Metrics:Are program of particular support to risk management.

Its a system of seeing, observing & judging,Expected to spot troubles & alert the stakeholders.

Metrics data could contain risk signals that can uncovered by analysis.23Preparing for RiskEstimation Models:Have basic potential to predict risks.Collect all estimation processes that are circulated & include a risk forecast in the scope

Detailed Planning:A certain level of depth & detail is an essential to flourish

Plan provide a neat & clean foil against risk to see them with ease.

Plans provide a clear and noise free mental landscape that can expose risk

24Preparing for RiskEffective Defect management: To manage the unknown risk & problems,Firstly you need to manage known problems, once they are controlled, unknown problems will be less likely to address.

Defect management techniques can be adopted for effective risk management.

The economical benefits achieved defect management will motivate employees to further gains through RM.25