Program and Portfolio Risk Management

Program / Portfolio RISK Management

About RiskGap.com

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• Full Risk Lifecycle support

• Risk Knowledge Bases

• ISO 31000, ISO 21500, PMI

Standards

• Webinars + Professional Community

• Expert ratings

About Speaker

Dr. Alexander Pavlov

• PhD, PMI PMP, IPMA CPM, Prime

• 30 yrs. experience in Project, Program and Portfolio

management at IBM, Nuclear industry and

Government.

• VP at Project Management Institute (PMI®) National

Chapter (2005-2007), Founder of Alexander Pavlov

Project Management School.

29th of June Webinar Content:

• Principle difference between portfolio, program

and project risk management.

• Risk negative influence on portfolio, program

and project

• What is a balance between risk tolerance and

avoidance ?

• How program component delay affecting

benefits delivery ?

• Practical recommendations on portfolio,

program and project risk management.

• Program & Portfolio Risk Management

Automation

Principle difference between portfolio,

program and project risk management

Risk definitions following PMI® Standards:

Portfolio Risk is an uncertain event or condition that , if it is occurs, has a

positive or negative effect on one or more portfolio strategic goals

Program Risk is an uncertain event or condition that , if it is occurs, has a

positive or negative effect on one or more program benefits

Project Risk is an uncertain event or condition that , if it is occurs, has a

positive or negative effect on one or more project objectives

such as scope, schedule, cost or quality

Risk negative influence

on portfolio, program and project

Innovation Level Project Program Portfolio

GoalSolution

of Tactical Task

Solution

of Complex Problem

Business

excellence achievement

Negative Risk Influence

• Failure of the timing

• Budget overruns

• Dissatisfaction of the customer

Loss benefits Loss to competitors

Negative Risk Influence

Result

• Stop project

• Loss of a customer

• Loss of income and profit

• Decline in market share

Liquidation of the Company

Practical recommendations

on portfolio risk management

• Portfolio risk response methods should be consistent with the strategy of

the organization but to be applicable to the components of the portfolio

• Portfolio risk response methods should reflect a balance between the level

of tolerance for risk and their adoption on the one hand, and the need of

risks avoidance on the other hand. This balance must meet the

organization's strategy

• If the company goes to market, she is usually forced to take risks and if

working for a long time – does not want to risk

Responding to the risks of the portfolio

during the Life Cycle of the Company

What is a balance between risk tolerance

and avoidance ?

Practical recommendations on portfolio risk

management: Portfolio Bubble Diagram

Bubbles are projects inside

the portfolio.

Projects negative risks

influence is growing throw

bubbles color: yellow color -

low, green – medium, red –

high negative risk influence.

Figures are budgets of

portfolio projects.

Practical recommendations on portfolio

risk management: Portfolio Bubble

Diagram

Following common approach for

balancing portfolio we need to put

diagonal from upper left to lower

right corner of the bubble diagram.

The result says that the projects that

are in the lower left corner need to

be removed from the portfolio.

Practical recommendations on portfolio

risk management: Portfolio Bubble

Diagram

Deleting a component in the

result of the balancing of the

portfolio leads to

reallocation of resources and

the absorption component

with the emergence of new

risks.

The red arrows show the new

risks influence on portfolio

components

on program risk management

• In the analysis and choice of the program risk response methods a top

priority should be the goals of the program, i.e. the business benefits of the

organization. For example, it may be appropriate to slow pace of work of

one of the components of the program and transfer its resources to another

component, where the benefits to the organization can be obtained faster!

• The mutual dependencies of the components have a significant impact on

the program schedule. For example, delays in obtaining results of one

component which are required for the other component of the program may

lead to failure of terms of the whole program

• The final results of the program very often can not

be obtained in time, as the integration of all

components of the program could not be

conducted due to the lack of results of some

components

• Delays in the timing of any component of the program (both projects and

operational activities) may lead to lost profit in the business of the company

Program Life Cycle Phases

How program component delay affecting

benefits delivery ?

Profit loss (^$) and Time loss (^T)

at the «Т» moment of Time

• The availability of high quality data of the

program risks is essential to the risk

analysis

• Low-quality data about risks (e.g., not

well-founded estimate of the probability of

occurrence or impact of risks) are the

source of new risks (!)

It is useful to ask on the following questions when assessing the quality

of risk data:

• What is the source of risk ?

• Why ?

• What can be risk impact ?

• What can be risk response method ?

• When we should respond on risk ?

Lack of answer on any above question may be source for additional program

risk (!)

In determining the degree of proximity of the risk it is useful to answer

the following questions:

• Is there a risk of the greatest impact on the program at some point in time

• Are there certain dates with risk appearance that is not desirable for the

program ?

• Is there any date on or after which the risk cannot affect the program ?

Project Risk Management Automation

100% PMI® Standards and ISO

21500 compliance:

• Risk Identification

• Assessment tools

• Teamwork and Collaboration

• Online Risk Register

• Mitigation Tasks management

Portfolio Risk Management Automation

Portfolio management

support

• Portfolio management

• Bubble charts

• Additional Charts

• Portfolio Risk Register

• Weekly Risk Digest

Lessons Learned management

Knowledge Bases for:

• Construction

• Engineering

• Software Development

• Aerospace & Defense

• Electronic & Telecom

Risk Management Process Value

Mitigate Risks and

Save 89%* of your

project budget

Build the Trust in

your team, and

with your Customer

Lessons Learned

and Knowledge

management

Business and

Project Portfolio

Transparence

The Main Conclusions

• While balancing portfolio it is necessary to analyze the risks remaining in

the portfolio components. There may be risks with mutual influence

(combined outcomes) on the strategic objectives of the organization

• It may be appropriate to slow pace of work of one of the components of

the program and transfer its resources to another component, where the

benefits to the organization can be obtained faster!

• Mutual dependencies of the components may have a significant impact on

the program schedule.

• Delays in obtaining results of one component which are required for the

other component of the program may lead to failure of terms of the whole

program!

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Contact us

Dr. Alexander Pavlov,

PhD, PMI PMP, IPMA CPM, Prime

http://en.apavlov-pm.com/

apavlov@apavlov-pm.com

Anatoly Suzdaltsev,

KdZen, Inc. CEO

http://riskgap.com/

anatoly.suzdaltsev@riskgap.com

Program and Portfolio Risk Management

Leadership & Management

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