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56 appropriate management response to their management Risks mitigation and planning begins by developing and doc- and mitigation. umenting a risk management strategy focused on the key All projects, regardless of project size and project complex- risks. Early efforts ity, will require some form of risk assessment and analysis. The framework of risk assessment and analysis remains the Establish the purpose and objective; same, but the tools and level of effort vary with project Assign responsibilities for specific areas; complexity and the decisions that need to be made. Identify additional technical expertise needed; A comparison of each risk's probability and impact yields a Describe the assessment process and areas to consider; relative ranking of the risks that can be used for risk man- Delineate procedures for consideration of mitigation and agement or, if warranted by project complexity, a detailed allocation options; quantitative risk analysis using probabilistic models to Dictate the reporting and documentation needs; and generate ranges of possible outcomes. Establish report requirements and monitoring metrics. Recalling from Chapter 3, there are five criteria that can be applied to help select risk assessment and analysis tools. This planning should address evaluation of the capabilities The selected method or tool will involve a trade-off be- of potential sources as well as early industry involvement. tween sophistication of the analysis and its ease of use. The list of risks is used as the basis for the solicitation of The tool should help determine project cost and sched- mitigation and planning options from key managers and ex- ule contingency. perts. The mitigation and planning options will require cost- The tool should have the ability to include the explicit benefit analyses (e.g., the cost of implementing a mitigation knowledge of the project team members concerning the effort versus the reduction in probability or impact to a risk) site, the design, the political conditions, and the project to assess the viability or impact of the options. Estimators and approach. risk analysts will therefore have key input into the mitigation The tool should allow quick response to changing mar- and planning process. ket factors, price levels, and contractual risk allocation. The project management staff will have the final input into The tool should help foster clear communication among the risk mitigation and planning efforts. They will determine the project team members and between the team and who "owns" the risk and is responsible for ensuring that it is higher management about project uncertainties and their managed effectively. The risk management plan and/or risk impacts. register should clearly identify who is responsible for manag- The tool, or at least its output, should be easy to use and ing and resolving each individual risk. understand. The risk analysis process can be complex due to the com- 6.4.2 Programming Phase Risk Mitigation plexity of the modeling required and the subjective nature and Planning Tools of the data available to conduct the analysis. However, the complexity of the process is not overwhelming and the Risk mitigation and planning tools that can be used in the generated information is extremely valuable. Programming Phase are listed in Table 6.3. Refer to Appen- dix A for complete tool descriptions. 6.4 Programming Phase Risk Mitigation and Planning Table 6.3. Programming phase risk mitigation and planning tools. Risk mitigation and planning efforts at the programming phase are the foundation for risk management throughout Tool Moderately Complex the remainder of the project development. The objectives are Minor Major to explore risk response strategies for the high-risk items identified in the qualitative risk assessment or quantitative risk analysis. The process identifies and assigns parties to I2.1 Red Flag Items take responsibility for each risk response. It ensures that each R3.1 Risk Management Plan risk requiring a response has an owner. The key output is the risk register or risk management plan. R3.5 Estimate RangesMonte Carlo Analysis R3.6 Risk Workshops 6.4.1 Programming Phase Risk Mitigation R3.11 Risk Breakdown Structure and Planning Inputs R3.12 Risk Register The ranked list of risks from the first two risk management R3.13 Risk Management Information System steps is the key input to the mitigation and planning effort.