Risk Treatment
Dr. Keith Harrison
DMS Risk SME Thales
Secretary APM Risk SIG
Risk Process
PRAM 2004
Initial Assessment (PID)
THREAT
OPPORTUNITY
Very High
High
High
Medium
Medium
Low
Low
Very Low
Very Low
Very Low
Low
Medium
IMPACT
High
Very High Very High
High
Medium
Low
PROBABILITY
PROBABILITY
Very High
Very Low
BENEFIT
• Do we want to treat all risk the same?
• Treat Threats different to Opportunities
• Remove all Threats?
• Take all Opportunities?
• Prioritize Effort
• Different Depending on PID location
• Order of Treatment
Treatments
 Threats
Avoid
Transfer
Mitigate
Accept
 Opportunities
Terminate
Exploit
Transfer
Share
Treat
Enhance
Tolerate
Reject
Plan Fallback/Option


Plan of what to do if the risk occurs
Trigger Point
THREAT
OPPORTUNITY
Very High
High
Medium
Medium
Low
Low
Very Low
Very Low
Very Low
Low
Medium
High
Very High Very High
IMPACT
High
Medium
Low
BENEFIT
 Change Objectives or Practices
 Limited Scope
 Project Type and Lifecycle dependent
 Opportunities
Threats
 Change Objectives (e.g.
(e.g. Requirements
Requirements Change)
Change)
– Easier
Win-Win
(Satisfies
stakeholders)
Difficultfor
after
Contract
Awardall(Project
Approval)
– Difficult
after Contract
Award (Project
Approval)
Unacceptable
to Stakeholders
(Customer)
 Change Practices (e.g.
(e.g. Sub-contractor)
Sub-contractor)
– Easier – Internal to Project
– Easier – Fixed/Firm Price Contract
Very Low
PROBABILITY
PROBABILITY
Avoid/Exploit
Very High
High
THREAT
OPPORTUNITY
Very High
High
Medium
Medium
Low
Low
Very Low
Very Low
Very Low
Low
Medium
High
Very High Very High
IMPACT
 Give the Risk Customer
to someone else
 Down
side
Company
(Pool)
– Cost
Project
Insurance
– Retained Element
Sub-Contractor
 Risk should be held by the Person
best placed to manage it
High
Medium
BENEFIT
Low
Very Low
PROBABILITY
PROBABILITY
Transfer/Share
Very High
High
Mitigate/Enhance
THREAT
OPPORTUNITY
Very High
High
High
Medium
Medium
Low
Low
Very Low
Very Low
Very Low
Low
Medium
High
Very High Very High
High
IMPACT

Main method of Treatment

Two Approaches

Effect the Cause - Change Probability

Effect Impact
Medium
Low
PROBABILITY
PROBABILITY
Very High
Very Low
BENEFIT

Undertaken by whoever is best placed to do the action

Cost effective £ < DPI

Funding - Project Contingency
THREAT
OPPORTUNITY
Very High
High
Medium
Medium
Low
Low
Very Low
Very Low
Very Low
Low
Medium
High
Very High Very High
IMPACT
High
Medium
Low
BENEFIT
Threats
– Active Decision
 Other
Treatments not viable
Monitor


• Technical/Financial
Plan Fallback
• Prob =VH, Impact =VL (Add to baseline - Raise Opportunity)
Level of Threat Acceptable (Prob =L, Impact =Low)
Opportunity
Other Treatments not viable (Financial)
Not in line with Company’s Strategic Direction
Very Low
PROBABILITY
 Do ‘Nothing’ Option
PROBABILITY
Accept/Reject
Very High
High
Questions
Change project scope
Avoid
Exploit
Proactive Responses
Insure
Pool
Threat
Share
contractually
Reactive
fallback
Accept
Plan
fallback
Plan
option
Reduce
probability
Enhance
probability
Reduce
negative
impact
Enhance
positive
impact
Reactive
Responses
Record or Monitor
Invest
Opportunity
Pool
Share
contractually
Realise
opportunity
Reject
PRAM 2004