Procedure: Risk Management
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-05Management System: Project ManagementSubject Area: Project DeliveryProcedure: Risk ManagementIssue Date and Revision Number:2/26/15, Rev. 0Lead Subject Matter Expert:Jon StickelmanManagement System Owner:Terry Brennan1.0 ApplicabilityThis procedure applies to Office of Environmental Management (EM) Federal Project Directors(FPD), Integrated Project Team (IPT) Members, and Program Managers responsible for theexecution of all projects subject to the mandatory project management requirements in U.S.Department of Energy (DOE) O 413.3 (Program and Project Management for the Acquisition ofCapital Assets). This procedure defines the process for assuring that the EM ConsolidatedBusiness Center (EMCBC) incorporates appropriate, efficient, and cost-effective methods toidentify, manage, and mitigate the impact of project-related risks. It is based on the DOE G413.3-7A (Risk Management Guide), and covers the process for initiating, planning, executing,monitoring and closeout of risks throughout the project life cycle. This procedure is alsoconsistent with the EM Enterprise Management System (EMERS) Risk Management procedureunder the Project Management Functional Area Description (FAD).This procedure may be used by EMCBC Operations Activity Managers (OAM) at the SmallSites, who are responsible for the execution of operations activities in accordance with the EMPolicy and Protocol for Operations Activities issued in March 2012. As such, OAMs shouldfollow the same risk management process steps outlined below (as appropriate) that an FPDwould follow throughout the lifecycle of a capital asset project.This procedure is structured to provide direction for the following risk management topics: Risk Planning and IdentificationRisk AssessmentRisk HandlingContingency AnalysisRisk MonitoringRisk Documentation and Communications1
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-052.0 Required ProcedureStep 1 The IPT is responsible for executing the risk planning process to develop the Federal RiskRegister. This includes: Preparation of the initial Federal Risk Management Plan per DOE G 413-3.7A(Risk Management Guide). Coordination and conduct of a Risk Summit for the initial identification and assessmentof project risks. Development of the initial project Risk Register.Step 2 The IPT will use the following top-down and bottoms-up process to identifyrisks/opportunities and to develop the initial project Federal Risk Register: Review the EM Contractor Risk Register to determine which risks are contractor risksand which risks are Federal risks. Consider top-down risks that may include generic and strategic risks potentiallyaffecting the entire EM Program. Evaluate baseline assumptions that could present a risk or opportunity to the project. Review list of potential project risks. Combine risks as needed to eliminate any duplicate risks. Develop statement for both external and internal risks and opportunities that bound therisk and provides a clear definition for subsequent analysis. Describe the conditions or situation that causes the risk. Perform at the sub-project work breakdown structure (WBS) level, and considerpotential impacts to other WBS elements.Step 3 The IPT should document the following information in the initial Risk Register (seeAttachment A: Sample Initial Risk Register): Risk Number Risk Event description Date Identified Project Baseline Summary (PBS) Number WBS(s) impacted Federal Project Director and Risk Owner Qualitative analysis of Likelihood, Impact and Risk LevelNOTE: As more formal risk analyses proceed, a quantitative analysis (e.g., cost andschedule impacts) of each risk/opportunity will be documented in a final Risk Register.The final Risk Register will be included in a formal Risk Management Plan.Step 4 The IPT is responsible for assessing risk events that could adversely impact the projectincluding risk definition, probability/likelihood determination, and an evaluation ofimpacts/consequences. The risk assessment should be documented on a Risk/OpportunityAssessment Form (see Attachment B: Sample Risk/Opportunity Assessment Form).Step 5 The IPT should base the risk Probability/Likelihood determination on the followingranges: Very Unlikely: Probability (0 - 10%) Unlikely: Probability ( 10 – 25%)2
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-05 Moderate: Probability (26 – 75%) Likely: Probability (76 – 90%) Very Likely: Probability ( 90 - 100%)Step 6 The IPT should base the Impact or Consequences Determination for Risk Occurrence onthe following criteria: Negligible: Minimal or no consequences in project mission, cost, or scheduleperformance (impact 0.2%) Marginal: Small reduction in project performance or moderate threat to project mission(impacts between 0.2% and 1%) Significant: Significant degradation in project performance (impact 1% to 3%) Critical: Project objectives cannot be achieved or excessive impact to project cost orschedule (impact 3% to 10%)) Crisis: Project objectives cannot be achieved or project mission failure is imminent(impact 10%)Likelihood of OccurrenceStep 7 A Risk Level Matrix such as below can be used to aid in the qualitative assessment of eachrisk event, characterizing each risk as a “High,” “Medium” or “Low” threat/benefit. TheRisk Level Matrix is a risk ranking tool based on a unit-less table that subjectivelyidentifies the likelihood of a risk event occurring and the impact or consequence of theevent, should it occur.Risk LevelVery LowMediumMediumVery icantCriticalCrisisImpact or Consequence of OccurrenceStep 8 The IPT should document the Basis for impact for each risk event, including impactassumptions, the basis for estimate, and cost estimate backup materials. These impactestimates can be conceptual in nature, but the basis of estimate should be clearly defined.Step 9 Each IPT, with assistance by the Risk Management subject matter expert (SME), shouldevaluate handling techniques based on feasibility, effectiveness, and cost as well asschedule implications.Step 10 The IPT should evaluate the following handling strategy techniques and the results shouldbe summarized on the Risk/Opportunity Assessment Form: Accept: Risk cannot be avoided or mitigated3
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-05 Mitigate: Strategy can be developed to reduce likelihood/consequences Avoid: Planning can result in an elimination of the risk Transfer: Risk can be transferred to EM Contractor or to DOE HeadquartersStep 11 If Mitigation is the selected risk management strategy, then the IPT should develop aMitigation Plan that identifies action items and responsible parties. The Risk Owner hasprimary responsibility for implementing the Mitigation Plan.Step 12 If the scope, cost, and schedule for risks/opportunities are not included in the projectPerformance Baseline (PB), then the IPT should develop a Baseline Change Proposal(BCP) to revise the baseline.Step 13 The IPT, with assistance from the Risk Management SME, is responsible for performing acontingency analysis at the 80% confidence level for both Lifecycle Baseline cost andschedule. The contingency analysis should be based on the identification and assessment ofproject risk as previously determined by the IPT.Step 14 The cost contingency should be calculated using Crystal Ball Risk Analysis software, aMicrosoft Excel add-on used for the quantitative examination of known DOE risks. Theprimary model inputs are probability of occurrence and a three-point cost estimate that wasdeveloped as part of the analysis of each risk (support for preparing such cost estimates isavailable through the EMCBC Office of Cost Estimating & Project Management Support).Step 15 The schedule contingency should be calculated consistent with the assumptions defined inthe cost contingency model. The project schedule, schedule uncertainty ranges, and DOErisk will be used as model inputs.Step 16 The IPT should review and update all project risks and risk mitigation actions on a regularbasis (e.g., during monthly IPT meeting).Step 17 On a quarterly basis, the IPT (with assistance from the Risk Management SME) shouldreview all project Risk/Opportunity Assessment Forms for revisions/closure, and shouldsystematically review each project for new risks. The basis for closure of risks should bedocumented on the Risk/Opportunity Assessment Form.Step 18 The FPD and IPT are responsible for monitoring and reporting the effectiveness of thehandling actions for all risks/opportunities, and should maintain a watch list of identifiedhigh priority risks.Step 19 The IPT, with assistance from the Risk Management SME, is responsible for: Updating the Federal Risk Management Plan on at least an annual basis. Documenting changes to the program in In-depth Risk Review Reports at the PBS level. Providing other reports requested by the FPD, EMCBC or DOE Headquarters officialsfor use in managing risks and risk planning.4
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-053.0 References – Forms/Attachments/Exhibits3.1 References DOE Order 413.3.B (Program and Project Management for the Acquisition of CapitalAssets) DOE Guide 413.3-7A (Risk Management Guide) Policy & Protocol for Office of Environmental Management Operations Activities (EM-2memorandum dated March 15, 2012)3.2 Attachments Attachment A: Sample Initial Risk Register Attachment B: Sample Risk/Opportunity Assessment Form4.0 Records GeneratedRecords generated through implementation of this procedure are identified as follows and aremaintained by the Office of Cost Estimating and Project Management Support (OCE&PMS) inaccordance with the EMCBC Organizational File Plan:RecordsCategoryCodeRecords TitleResponsibleOrganizationENV 16-05ADMINISTRATIVEMANAGEMENT RECORDS,Project Control FilesOffice of CostEstimating and ProjectManagement SupportExamples:Risk RegisterRisk/Opportunity Assessment FormCost Impact Basis SummaryRisk Management Plan5QAClassification(Lifetime,NonPermanentor NotApplicable)NotApplicable
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-055.0 EMCBC Record of RevisionEMCBC RECORD OF REVISIONDOCUMENT TITLE: Subject Area Procedure: Risk ManagementIf there are changes to the controlled document, the revision number increases by one. Indicatechanges by one of the following:lPlacing a vertical black line in the margin adjacent to sentence or paragraph that was revised.lPlacing the words GENERAL REVISION at the beginning of the text.Rev. No.Description of ChangesRevision on PagesDate0Initial issueN/A2/26/156
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-05ATTACHMENT ASAMPLE INITIAL RISK REGISTERRiskID #001002003004Risk DescriptionDue to unknownhistorical use ofthe Phase Ibuildings’ footprintthe estimatedresidual soilcontaminationmay be greaterthan estimated,resulting inadditionalexcavation,shoring, siterestoration anddisposal costs andpossible scheduleextension.Due to the soilcharacteristics andhistorical buildinguse, there is apossibility thatcontaminationmay leak andmigrate alongunderground ductbanks and otherutility lines,resulting inincreased costsand schedule.Due to forcemajeure orunusual weatherconditions basedon NOAA averages,project progressmay be delayedresulting inadditional cost andschedule.Due to possibleregulatory agencyconcerns, there isa risk thatdocument reviewsmay take longerthan anticipated,resulting indelayed approvalsby state and/orlocal itigation ActionsPostProbabilityPost CostImpactPostScheduleImpactDOEJ. appropriatequantities of soil fordevelopment ofPMB. Define theDOE decisionprocess for actingon additional soilvolumes abovethose estimated inthe PMB.DOEJ. DoeOpenMitigateCharacterization ofsanitary sewer lineinteriors.DOEJ. DoeOpenAcceptUnlikelyModerateModerateDOEJ. l
SAP: Risk ManagementRiskID #005006007008Risk DescriptionDue to possiblestakeholderconcerns, there isa risk that theproject may bedelayed, resultingin schedule delaysand increased cost.Due to unknownhistorical use ofthe Phase Ibuildings theestimated buildingcontaminationmay be greaterthan plannedamounts, resultingin additionalremoval anddisposal costs anda resulting impactto schedule.Due to unknownhistorical use ofthe Phase Ibuildings’footprint, theactual waste typesmay be differentthan anticipated,resulting indiffering removaland disposal costsand/or impact toschedule.Due to delays inreceipt of fundingfor the LBNL OldTown project as awhole, projectschedule and/orcosts mayincrease.Funding receivedmay not match theplanned executionof the LBNL OldTown project as wnerJ. DoeJ. DoeJ. DoeJ. ation ActionsMitigateMitigation actionscenter on reducingrisk eventprobability and/orconsequence,including continuedCAB meetings withEM FPDparticipation whenOld Town Projectdiscussions areplanned.MitigateMitigation actionscenter on reducingrisk eventprobability and/orconsequence.Specific actionitems cannot bedetermined untilEM review of theM&O Contractor’sPerformanceMeasurementBaseline (PMB).MitigateMitigation actionscenter on reducingrisk eventprobability and/orconsequence,including furthercharacterizationactivities.AcceptMitigation actionscenter on reducingrisk eventprobability and/orconsequence,including: normalEM budgetformulation processwill be conductedand, if required,additional fundingauthorization willbe pursued to meetproject objectives.8PostProbabilityPost teResidRiskLevel
SAP: Risk ManagementRiskID #Risk Description009OPPORTUNITY:Due to currentconditions of theslabs, there maybe an opportunityto leave in place,thus avoidingremoval, disposaland siterestoration costs.SAP-OCE&PMS-413.3B-B-05RespOrgDOEOwnerJ. DoeRiskStatusOpenHandlingStrategyMitigation ActionsFacilitateMitigation actionscenter on reducingrisk eventprobability and/orconsequence,including FPDworking with BSOand M&OContractor to reachconsensus on theneed for slabremoval.9PostProbabilityPost CostImpactPostScheduleImpactResidRiskLevel
SAP: Risk ManagementSAP-OCE&PMS-413.3B-B-05ATTACHMENT BSAMPLE RISK/OPPORTUNITY ASSESSMEMT FORM[Project Name] Risk/Opportunity Assessment FormID Number:Revision:Last Date Evaluated:Event Title:Period:Type:WBS Element:Status:PBS:Title:Responsible Org:Contact:Date Identified:Statement of evel:Cost Impact ( ):Event Trigger:Best CaseMost LikelyWorst CaseSchedule Impact (Mos):Handling Strategy:Description:Handling Strategy Action Items:HS ImplementationBasis:Cost ( K):HS ImplementationBasis:schedule (Wks):Other Handling Strategies:Statement of Residual Risk:10Impact Basis:
SAP: Risk elihood:ResidualBasis:Consequence:Residual RiskLevel:Residual CostBest CaseMost LikelyWorst CaseImpact ( ):Residual ScheduleImpact (Mos):Impacted Scope of Work:Evaluation Comments:Risk Closure Evaluation:Date Closed:Reason for closure:Handling Strategy Effective?Lessons Learned or comments:11Residual Impact Basis:
SAP: Risk Management SAP-OCE&PMS-413.3B-B-05 2 2.0 Required Procedure Step 1 The IPT is responsible for executing the risk planning process to develop the Federal Risk Register. This includes: Preparation of the initial Federal Risk Management Plan per DOE G 413-3.7A (Risk Management Guide).
81. Risk Identification, page 29 82. Risk Indicator*, page 30 83. Risk Management Ω, pages 30 84. Risk Management Alternatives Development, page 30 85. Risk Management Cycle, page 30 86. Risk Management Methodology Ω, page 30 87. Risk Management Plan, page 30 88. Risk Management Strategy, pages 31 89. Risk
Risk is the effect of uncertainty on objectives (e.g. the objectives of an event). Risk management Risk management is the process of identifying hazards and controlling risks. The risk management process involves four main steps: 1. risk assessment; 2. risk control and risk rating; 3. risk transfer; and 4. risk review. Risk assessment
Tunnelling Risk Assessment 0. Abstract 1. Introduction and scope 2. Use of risk management 3. Objectives of risk assessment 4. Risk management in early design stages 5. Risk management during tendering and contract negotiation 6. Risk management during construction 7. Typical components of risk management 8. Risk management tools 9. References .
Risk Matrix 15 Risk Assessment Feature 32 Customize the Risk Matrix 34 Chapter 5: Reference 43 General Reference 44 Family Field Descriptions 60 ii Risk Matrix. Chapter 1: Overview1. Overview of the Risk Matrix Module2. Chapter 2: Risk and Risk Assessment3. About Risk and Risk Assessment4. Specify Risk Values to Determine an Overall Risk Rank5
Standard Bank Group risk management report for the six months ended June 2010 1 Risk management report for the six months ended 30 June 2010 1. Overview 2 2. Risk management framework 3 3. Risk categories 6 4. Reporting frameworks 8 5. Capital management 10 6. Credit risk 17 7. Country risk 36 8. Liquidity risk 38 9. Market risk 42 10 .
The central part of a risk management plan is a document that details the risks and processes for addressing them. 1. Identify and assess the Risks 2. Determine Risk Response Strategy Avoid the risk Transfer the risk Mitigate the risk Accept the risk 3. Execute a risk management plan 4. Monitor the risks and enhance risk management plan
1.5 Tactical Risk Decisions and Crisis Management 16 1.5.1 Risk preparation 17 1.5.2 Risk discovery 17 1.5.3 Risk recovery 18 1.6 Strategic Risk Mitigation 19 1.6.1 The value-maximizing level of risk mitigation (risk-neutral) 19 1.6.2 Strategic risk-return trade-o s for risk-averse managers 20 1.6.3 P
The potential benefits of digital risk initiatives include efficiency and productivity gains, enhanced risk effectiveness, and revenue gains. The benefits of Exhibit 1 Digital risk management can significantly reduce losses and fines in core risk areas. Risk 2017 Digital Risk Exhibit 1 of 3 Credit risk Risk areas osses 2015, billion
