GSOE9820 · Engineering Project Management
Risk and Opportunity Management
This chapter builds the risk register the Task 2 PMP rubric rewards: risks written with clear trigger conditions and response plans, scored by probability × impact, with contingency costed in the budget — and, because the course treats opportunity alongside threat, at least one planned opportunity. Qualitative risk scoring is examinable, and the interview asks directly about the biggest risk and how it affects success, so risk work is assessed three ways.
What this chapter covers
- 01Risk defined as an uncertain event with a positive (opportunity) or negative (threat) effect on objectives
- 02The risk process: Identify → Qualitative analysis → (Quantitative) → Plan responses → Implement → Monitor
- 03The risk register: cause → event → effect, with trigger, probability, impact, score, response, owner, residual risk
- 04Qualitative analysis: Probability × Impact matrix; Risk Score = P × I; prioritise by score
- 05Quantitative analysis: Expected Monetary Value, EMV = Probability × Impact ($)
- 06Threat responses: Avoid, Transfer, Mitigate, Accept (+ Escalate)
- 07Opportunity responses: Exploit, Enhance, Share, Accept (+ Escalate)
- 08Contingency plans costed in the budget; residual vs secondary risk
Score a risk and plan an integrated response
- +1Write the risk properly: cause → event → effect with a trigger. Cause: a single-source switchgear supplier. Event: late delivery. Effect: installation and commissioning slip. Trigger: PO unconfirmed by day 20 — a clear decision point that tells you the risk has materialised.
- +1Score it. Probability = 3, Impact = 4 on the 1–5 scale, so Risk Score = P × I = 3 × 4 = 12. On a green→amber→red heat matrix a 12 sits in the red (high-priority) zone.
- +1Choose a response and owner. This is a threat, so pick from Avoid/Transfer/Mitigate/Accept. Mitigate: dual-source the switchgear and add a 10-day schedule buffer to reduce probability and impact. Owner = the procurement lead, who monitors the day-20 trigger.
- +1Cost the contingency and note residual risk. The contingency response (expedited freight or the buffer) is funded from the contingency reserve inside the cost baseline, and the line traces to this risk ID. After mitigation, a smaller residual risk of a shorter slip remains and stays on the register; watch for any secondary risk the dual-source introduces (e.g. integration mismatch).
Key terms
- Risk
- An uncertain event or condition that, if it occurs, has a positive (opportunity) or negative (threat) effect on one or more project objectives. This course explicitly treats opportunity alongside threat.
- Risk register
- The central risk artefact: each entry gives the risk description (cause → event → effect), trigger, probability, impact, risk score, response, owner and residual risk. The rubric rewards clear triggers and specific, integrated responses.
- Trigger
- The observable condition or decision point that signals a risk has occurred (or is about to), so the register makes it unambiguous when to execute a contingency.
- Probability × Impact matrix
- The qualitative-analysis tool: rate probability and impact (e.g. 1–5 or Low/Med/High), compute Risk Score = P × I, and prioritise by score on a green→amber→red heat map.
- Risk response strategies
- For threats: Avoid, Transfer, Mitigate, Accept (plus Escalate). For opportunities: Exploit, Enhance, Share, Accept (plus Escalate). The chosen response gets an owner and, where relevant, a costed contingency.
- Contingency plan
- A pre-planned response executed if a risk trigger occurs, costed in the contingency reserve and traceable to a specific risk. Residual risk is what remains after responses; a secondary risk is a new risk introduced by a response.
Risk and Opportunity Management FAQ
How do I score and prioritise a risk?
Rate its probability and impact (for example 1–5 each), multiply to get Risk Score = P × I, and place it on a green→amber→red heat matrix; prioritise by score. Higher scores get stronger responses and are watched more closely. For money decisions you can add a quantitative Expected Monetary Value, EMV = probability × impact in dollars.
What responses can I choose from?
For threats: Avoid (remove the cause), Transfer (shift it, e.g. insurance/contract), Mitigate (reduce probability or impact), or Accept (live with it, often with contingency), plus Escalate. For opportunities: Exploit, Enhance, Share, Accept, plus Escalate. Because this course plans for opportunity as well as threat, include at least one opportunity in your register.
What makes a good risk register entry here?
A clear cause → event → effect statement with an unambiguous trigger, a probability and impact score, a specific response with a named owner, and a contingency that is costed in the budget and traceable to that risk. Vague, unintegrated entries lose marks; the strength is in the decision points and the traceability to schedule and budget.
Where is risk assessed in GSOE9820?
Three ways: the Task 2 PMP risk register (rubric rewards clear triggers, integrated responses and a costed contingency), the final Knowledge Quiz (qualitative scoring and response strategies), and the interview, which asks about your biggest risk and how it impacts success and where its contingency sits in the budget.
Exam move
Practise writing risks as cause → event → effect with an explicit trigger, because a clear decision point is what the rubric and interview reward — "vendor delivers late (trigger: PO unconfirmed by day 20)" beats "supply risk." Drill the qualitative scoring (Risk Score = P × I) and know the heat-matrix zones, and be able to add an EMV = probability × impact in dollars when a quantitative view is needed. Memorise the two response sets and use the right verbs: threats take Avoid/Transfer/Mitigate/Accept, opportunities take Exploit/Enhance/Share/Accept — and always include at least one opportunity, since this course plans for upside. For the PMP, integrate: give every significant risk an owner, cost its contingency in the contingency reserve, and trace that line to the risk ID so you can answer "where is it costed?" in the interview. Track residual and secondary risks so responses do not create hidden new risks. Ask Sia to give you a scenario and check your scoring, response choice and integration.
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