"Engineering Projects Engineering Management 2Learning Outcome: • Identify, evaluate and analyse project risks andsuggest strategies for reducing risks.Resources: LarsonProjectManagement Chapter 7 Managingrisk 1 –3Risk • Definition – Uncertain or chance events that planning can not overcome or control – PMI states ‘uncertain event or condition that, if it occurs, has a positive ornegative effect on a project’s objective’ • Characteristics – Focuses on the future – Deals with probabilities – Tends to emphasise negative consequencesThe risk project life cycleRisk anatomy Cause How and why can the event happen? Event What can go wrong? An occurrence, an outcome Effects What is the consequence? Risk and uncertainty • Certainty (knowns) – decision-maker aware ofalternatives and outcomes • Uncertainty (unknown unknowns) – the future isunknowable so the probabilities andconsequences remain unknown • Risk (known unknowns) – situation where thefuture can be analysed and planned for Project risk management • Attributes: – Decision-making process (informs decisions) – Structure and formality (helps effective management) – Continuity (iterative, continuous monitoring) – Project focus (for project performance and outcomes)"