CH 2 PRM

Risk Management Roles
Who does what?
1
 Managing risk is one of the project management office’s

(owner’s) most important functions in making any major
project successful.
 The project management office has the ultimate
responsibility for identifying, analysing, mitigating, and
controlling project risks, including acceptance of the project
risks, or modification, or termination of the project—all of
which are project risk management activities.
2
 Effective risk management begins with risk assessment.

There are two primary purposes for a pre-project risk
assessment:
– (1) to decide whether to execute the project and accept
the risks, or terminate it as unacceptably risky and
– (2) to identify the highest-priority risk factors that should
receive the most attention by management.
3
 The project risk management may play major roles in

identifying, analysing, mitigating, and controlling project risks.
 There are no paradigms for assigning responsibility for specific
risk management activities to the members of the PM team.
 The optimal role and responsibilities needs to be determined
by the project risk management office, then tracked and
managed using different project management tools (checked
4 the tools like log-frame).
 The roles and responsibilities for the project management

team—the responsibility for the management of the
stakeholder’s interests and the stakeholder’s risks.
5
Project Executive Officers

Other titles may describe this role: Director of PM; Director of
Programs and Strategy; Director of Enterprise PM; Director of
Project Portfolio Management.
Reports to a senior C-level executive, preferably the CEO
provides leadership, direction, and oversight of all corporate
programs and projects under development and execution.
6
Project Executive Officers

This role also provides executive oversight for all divisional
projects and maintains responsibility for data integration and
reporting for all projects and programs within the organization.
Oversees development and management of the Strategic
Project Office and plays a key facilitative role in project portfolio
management.
7
Risk Management Roles of Executive Officers:

The executive team should be bought into the idea of using
best practice, tried-and-tested approaches to identify, manage,
track and control project risk on all activities.
There is very little to lose through this approach and an awful
lot to gain: better insights, better management information,
better clarity for budgeting and the very strong likelihood of
8 better project results.
Project Executive Officers...
The executive officers can be effectively carried out without
stopping projects dead in their tracks or even slowing them
down.
Risk consciousness, like safety consciousness, has to flow from
the top throughout the project activities.
With the director of the divisional project offices, oversees
major periodic divisional portfolio meetings, driving results and
9 resolving key project and program issues.
Project Managers
The Project Portfolio Manager’s responsibility is ideally
enterprise wide. This role has become much more common as
companies seek to align projects and strategies.
Manages corporate or divisional project portfolios by
managing the process for identification/selection of projects
that support corporate business strategy.
10
Project Managers
This is done using a facilitative process where manager
facilitates decisions with the leadership team by providing data,
inputs, analysis and facilitative assistance so the executives
reach prioritization, conclusions and ultimately “own” the
organizational projects.
This position reports to an upper-level executive; in a small
11 company, it may report to the CEO.

The Roles of Project Managers in managing risk

Project managers oversee the management of risks for
multiple projects and should have the authority to ensure that
the policies and procedures established by senior executives
are followed.
They have the responsibility to manage risks across projects
and to transfer lessons learned from one project to another.
12
The Roles of Project Managers in managing risk…

Project managers are the ones responsible for following the
project risk management processes, once they are in place, and
doing the work to ensure that project risk is managed.
As they will be the ones using the tools and techniques most
often, they will have useful feedback on what fits best with the
other project management processes.
13
Risk Management Board
Harsh economic times hit boards of directors squarely, as they
came face to face with complex legal issues and failing
businesses.
The financial downfall, along with the subsequent fallout, was
an abrupt wake-up call for boards of directors to delve deeper
into their organization’s risk management practices.
The pervasiveness of risk in the workings of everyday business
means that boards must factor risk as an integral part of PM.
Today’s businesses are shaped with complexities and
debatable issues like never before—issues that hold the
14 potential to destroy organizations overnight.
Risk Management Board: the roles
(1) Increased Scrutiny Over Risk
– In addition to management, boards are increasingly being
held accountable for managing risk.
– Corporate governance rules and credit rating agencies are
taking a stronger role in corporate risk by forming policies
that address risk management policies.
– These emerging trends are forcing boards to assess past
organizational exposures to risks.
– Economic trends also demand boards to be forward-
thinking with regard to overseeing current financial risks
15 and exposures to minimize the impact of financial crises.
Risk Management Board: the roles cont.
(2) Potential Loss Areas
– Exposures to financial loss can include real and personal
property, as well as property that is tangible and intangible,
and personnel losses.
– Poor risk management exposes organizations to civil and
statutory offences, which can result in fines or other legal
complications.
– Examples of risks with financial impact include:
 Retained losses—insurance deductibles, retention

amounts; Net insurance proceeds; Costs for loss control
16 measures
(3) Finding the Balance Between Taking and Managing Risks

– Board members, directors, managers, and stakeholders
know that there are strategic advantages to taking risks
and that realizing growth requires some degree of risk.
– While managing complex business transactions, managers
struggle to strike a balance between adding value while
17 managing risks.
(4) Development of Policies, Procedures, and Awareness
– The board should not take a direct role in managing risks. The
board’s role should be limited to risk oversight of management
and corporate issues that affect risk.
– Boards can fulfill their role in risk by:
 Developing policies and procedures around risk that are

consistent with the project’s strategy and risk appetite.
 Following up on management’s implementation of risk
management policies and procedures.
 Following up to be assured that risk management policies
18 and procedures function as they are intended.

(5) Risk Management Oversight from a Broad Perspective
– Board members need to have a good understanding of risk
management, even when they lack expertise in that area.
– Boards should perform a formal review of risk management
systems, annually.
– Boards can continue to expect risk management to be an
increasingly challenging part of board decision-making. There
is a lot at stake with poor risk management practices.
– The impact will be felt from the top to the bottom and
transcend across the board, management, and stakeholders.
19
Supportive Activities of risk management

“Click on hyperlink to refer a material on support activities of risk
management”
20
Workgroup (Practitioner)
– A risk management workgroup is a separate and often
independent unit within the project management team
headed by the project risk manager or the chief risk officer.
– It helps place a value on the project’s activities (such as
procuring, communicating, controlling quality, staffing etc.).
– The team also develops strategies to mitigate identified
risks, applies risk management methodologies and risk
analysis tools, and integrates insurance policies of treating
prioritized threats with the project management team.
21
Roles and responsibilities by a risk management workgroup

– The primary responsibility is to ensure that the project is
provided with a complete risk management information
system that ultimately determines how to control and
oversee the project’s effectiveness and fulfillment.
– The workgroup oversees and treats for the execution of the
five-step process:
22
Workgroup cont.
(1) Admit and Identify

–The implementation of every activity within a project involves
some degree of threat or uncertainty about future events. The
first step in managing such threats is to acknowledge and
identify them. Some of the threats are generic and inherent to
the execution of the project so virtually any activity has a risk
23 to fail.
Workgroup cont.
(2) Measure and Prioritize

– At the second step, the team evaluates the probability of each
risk’s occurrence and estimates its possible effect and cost to
the project and its activities.
– The team uses results obtained to identify priority areas of
concern for the risks that are most likely to occur and are
expensive when they do happen. Such risks get High Priority.
24
Workgroup cont.
(3) Implement a Strategy
– The team decides how to manage the prioritized risks by
using risk management strategies. So the next task of the
workgroup is to develop a written plan which outlines what
steps should be taken to manage major risks and allow the
performing company
– The PMBOK Guide offers the four basic risk management
strategies. All the strategies are usually implemented with
help of risk management software solutions.
25 “Avoidance, Retention, Sharing…. Strategy.
Workgroup cont.
(4) Implement Risk Management Plan
– It is the major duty of the team to formally adopt and
implement a risk management plan template.
– The members who have appropriate risk management
education and competencies can guide those who have
questions. Also certain employees and volunteers may be
involved in risk management training activities in order to
allow the team members meeting specific risk treatment
and control responsibilities.
26
Workgroup cont.
(5) Review and Revise Risk Management Plan
– The risk management team should evaluate an existing
risk management plan example to ensure its continued
appropriateness, comprehensiveness, and effectiveness
(read more at Project Management Guidelines)
27
Employer
 The employer has a duty to:
– ensure the safety and health of workers in every aspect
related to work;
– organize the risk assessment;
– select the person(s) to carry out the assessment and ensure
they are competent;
– assess the risks and implement protective measures;
– consult the employees or their representatives about the
organization of the risk assessment, and the persons carrying
out the assessment and implementing the preventive
28 measures;
Employer
 The employer has a duty to:
– be in possession of an assessment of the risks;
– draw up assessment records having consulted with the
workers and/or their representatives, or even involved them
in the work, and make the records available to them;
– ensure all persons affected are informed of any hazard, of any
harm to which they may be at risk and of all the protective
measures taken to prevent such harm.
29
To comprehensively understand the overall roles and
responsibilities of “Project Management team”
Please refer the “Project Management Roles & Responsibilities”
Second Edition By J. Kent Crawford
30

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Risk Management Roles

Who does what?

 Managing risk is one of the project management office’s

 Effective risk management begins with risk assessment.

 The project risk management may play major roles in

 The roles and responsibilities for the project management

Project Executive Officers

Project Executive Officers

Risk Management Roles of Executive Officers:

11 company, it may report to the CEO.

The Roles of Project Managers in managing risk

The Roles of Project Managers in managing risk…

 Retained losses—insurance deductibles, retention

Risk Management Board: the roles cont.

(3) Finding the Balance Between Taking and Managing Risks

 Developing policies and procedures around risk that are

Risk Management Board: the roles cont.

Supportive Activities of risk management

Roles and responsibilities by a risk management workgroup

(1) Admit and Identify

(2) Measure and Prioritize

Please refer the “Project Management Roles & Responsibilities”

Second Edition By J. Kent Crawford

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