Risk management (student)

1. Basic Definition of Risk

• Risk is a combination of two elements: probability of occurrence and impact

• Formula: Risk = f(probability, consequence)

• Risk can also be defined as: Risk = f(hazard, safeguard)

• What types of risk
  • technical
  • planning
  • business
  • budget
  • quality
  • regulatory
  • security
  • availability of raw materials, services or supplies

Risk Component Calculation

Probability (P)

Scale from 1 to 5 where:

1 = Very unlikely (1-20%)
2 = Unlikely (21-40%)
3 = Possible (41-60%)
4 = Likely (61-80%)
5 = Very likely (81-100%)

Domain statistics can be studied to get indicators.

Practical example:

• Risk of App Store delay for a mobile app:
  • Statistically, 70% of new apps get feedback
  • Therefore Probability = 4 (Likely)

Impact (I)

Scale from 1 to 5 where:

1 = Minimal (Negligible impact)
2 = Low (Limited impact)
3 = Moderate (Significant impact)
4 = Major (Serious impact)
5 = Critical (Catastrophic impact)

Practical example:

• Impact of a server crash:
  • Loss of all connected users
  • Revenue loss during downtime
  • Reputation damage
  • Therefore Impact = 5 (Critical)

Risk Score

Formula: Score = Probability × Impact

This gives a scale from 1 to 25:

1-5   = Low risk
6-12  = Moderate risk
13-19 = High risk
20-25 = Critical risk

Usage Tips

1. Always evaluate with a team for more objectivity

2. Regularly reassess scores

3. Document the reasons for your assessments

4. Use historical data when available

3. Risk Management Includes 5 Main Aspects

• Risk planning

• Risk identification

• Risk analysis

• Response strategy development

• Risk monitoring and control

4. Risk Response Strategies

For negative risks:

• Avoidance: change the plan to eliminate risk

• Mitigation: reduce probability or impact

• Transfer: have a third party bear the risk

• Acceptance: accept potential consequences

For opportunities:

• Exploitation

• Sharing

• Enhancement

• Acceptance

5. Key Management Principles

• Be proactive rather than reactive

• Integrate risk management into all project processes

• Document through a Risk Management Plan (RMP)

• Train staff appropriately for their roles

• Implement tracking indicators (earned value, program metrics, schedule tracking)

6. Monitoring and Control

• Establish cost, technical performance, and schedule indicators

Exercise: Development of a Photo Sharing Mobile Application

You are leading a team that needs to develop a mobile photo sharing application in 4 months. The application must allow users to take photos, modify them with filters, and share them with their friends.

Open a Docx Microsoft document and create a risk management plan.

Part 1: Risk Identification

Instruction: Identify potential risks in each category:

Part 2: Risk Analysis

Instruction: Probability, impact, and score

Part 3: Response Strategies

Instruction: find response strategies and transformation into opportunity

Part 4: Monitoring Plan

Instruction: develop a monitoring plan

Part 5: Contingency Plan ("just in case" or "Plan B")

Instruction: develop a Contingency plan

Exercise: Development of a Photo Sharing Mobile Application

You are leading a team that needs to develop a mobile photo sharing application in 4 months. The application must allow users to take photos, modify them with filters, and share them with their friends.

Open a Docx Microsoft document and create a risk management plan.

Part 1: Risk Identification

Instruction: Identify potential risks in each category:

I can help you identify a few risks

Technical Risks

1. Incompatibility with certain iOS/Android versions

2. User data storage issues
   • Exceeding planned storage capacity

Regulatory Aspects

• Non-compliance with GDPR or other local regulations

• Inadequate storage of personal data

• Data localization issues (some countries require local storage)

Security Aspects

• Data leaks

• Unauthorized access

• Data loss

• Storage system vulnerabilities

Planning Risks

1. Delay in photo filter development

2. App Store approval time longer than expected

3. Third-party API integration more complex than anticipated

Business Risks

1. Direct competitor appears before launch

2. Server costs higher than expected

3. Slower user adoption than expected

4. Quality performance
   1. the download of the photo could take too long
   2. display the photo could take too long

Part 2: Risk Analysis

Instruction: Probability, impact, and score

Example analysis for three major risks:

Part 3: Response Strategies

Instruction: find response strategies and transformation into opportunity

For App Store delay (Score: 12)

• Strategy: Avoidance

• Actions:
  1. Study store guidelines in detail
  2. Prepare submission in advance
  3. Plan for specialized consultant review
  4. Include 2-week margin in planning

For user data storage (Score: 15)

• Mitigation
  1. Architecture
     • Use scalable storage system (e.g., AWS S3)
  2. Monitoring
     • Monitor storage usage
  3. Security
     • Data encryption
     • Strong authentication
     • Regular security audits

• Transfer strategy
  • Use established cloud services (AWS, Google Cloud, Azure)
  • Subscribe to cyber-risk insurance
  • Partnership with data storage experts

Transformation into opportunity

• Higher than expected server costs

  Transformation into opportunity:

  • Motivation to develop more efficient architecture
  • Development of cloud optimization expertise

• Direct competitor appearance

  Transformation into opportunity:

  • Learning from competitor's mistakes
  • Motivation to accelerate innovation
  • Opportunity to clearly differentiate

Part 4: Monitoring Plan

Instruction: develop a monitoring plan

1. Technical Indicators
   • Image processing time
   • Crash rate
   • Memory usage

2. Planning Indicators
   • Team velocity
   • Burndown chart
   • Key stage validation delays

3. Business Indicators
   • Infrastructure costs
   • User acquisition rate
   • User retention

For user data storage

• Technical Metrics
  • Storage utilization rate

• Business Metrics
  • Storage cost per user
  • Stored data/active users ratio
  • Storage growth rate

Part 5: Contingency Plan ("just in case" or "Plan B")

Instruction: develop a Contingency plan

For user data storage

1. Short term
   • Rapid increase in storage capacity
   • Temporary limitation of storage per user
   • Emergency data compression

2. Long term
   • Migration to new storage solution
   • Data architecture restructuring
   • Storage process optimization