PMGT5891 Strategic Risk Management

How PMGT5891 is assessed

Weights are from the University of Sydney unit page for the Semester 2 2026 offering and total 100%. The individual assignment is the hurdle task; the unit's Canvas assessment page states that you must get 50% in the individual assignment to pass the unit, regardless of the sum of your other marks. Earlier Canvas materials list the same weights under slightly different names (Group assignment 1 report, Group assignment 2 presentation, Group discussions).

Current PMGT5891 dates

Dates are as published in the current course materials. Confirm exact deadlines and submission settings in the live LMS.

What PMGT5891 covers

The unit follows the risk management process in teaching order. It starts with what risk means and how risks are identified against objectives, moves through qualitative assessment, treatment and allocation, then turns quantitative with Monte Carlo simulation, contingency and decision trees, before closing with enterprise risk management, resilience and risk psychology.

It works from two primary references, ISO 31000 and the Project Management Institute's risk standard for portfolios, programs and projects, with the PMBOK Guide alongside, and it follows the risk management process in the order a practitioner meets it.

Early weeks build the vocabulary: what counts as a risk, why a risk can be an opportunity as well as a threat, and why objectives must be clear before anything can be identified. Identification tools come next, including the risk breakdown structure, cause and effect risk statements and a critical review of public risk register templates.

Qualitative assessment with likelihood and consequence scales then leads into treatment, monitoring, communication and reporting. The middle of the semester turns quantitative. You meet three-point estimates, probability distributions, Monte Carlo simulation, sensitivity analysis and contingency, mostly through guided Excel practice.

Decision trees and expected monetary value link those numbers to real choices, and governance questions follow: who owns a risk, who decides, and when a risk moves up the chain. The final teaching weeks widen the lens to enterprise risk management, resilience and bow tie analysis, and the psychology that bends human judgement about risk.

Class discussion leans on real failures and decisions, from the Sampoong department store collapse and the I-35W bridge to the Carter Racing case. For Semester 2 2026 the University lists six assessment components. The largest is the individual assignment, worth 40%, listed as a one-hour written exam hurdle task in the formal exam period with AI prohibited. Group work and class engagement make up the other 60%.

This guide follows the teaching sequence chapter by chapter and closes with mixed practice and an exam-morning plan.

Worked example · free

Ground risk decision tree: redesign now or carry the risk

Key terms

Risk

Risk is the effect of uncertainty on objectives, the ISO 31000 definition this unit starts from, which covers positive and negative effects.

Opportunity

An opportunity is a risk whose effect on objectives would be positive, so the response aims to increase its likelihood or impact.

Risk register

A risk register is the working record of identified risks, with each risk's description, owner, assessment, response and status.

Risk breakdown structure

A risk breakdown structure is a hierarchy that groups a project's risks by source, from broad categories down to specific risks.

Risk owner

A risk owner is the named person who is accountable for a particular risk and has the authority to act on it.

Risk appetite

Risk appetite is how much risk, and which kinds, an organisation is prepared to seek or keep while pursuing its objectives.

Expected monetary value

Expected monetary value is the probability of an outcome multiplied by its monetary impact, summed across the outcomes of a choice.

Three-point estimate

A three-point estimate describes an uncertain quantity by its optimistic, most likely and pessimistic values.

Monte Carlo simulation

Monte Carlo simulation is a method that samples uncertain inputs many times to build the distribution of a project outcome such as total cost.

Contingency reserve

A contingency reserve is an amount added to an estimate to cover identified risks whose occurrence or effect is uncertain.

Management reserve

A management reserve is a budget amount held back for unforeseen work and unidentified risks, controlled above the project manager.

Bow tie analysis

Bow tie analysis is a diagram that links threats and preventive barriers on one side of an event to recovery barriers and consequences on the other.

Three lines of defence

The three lines of defence model separates the business units that own risk, the functions that oversee it and the internal audit that gives independent assurance.

Loss aversion

Loss aversion is the tendency to weigh a loss more heavily than a gain of the same size, a core feature of prospect theory.

PMGT5891 FAQ

Questions students ask in each PMGT5891 chapter

Is risk always negative in project management?

No. Both ISO 31000 and the PMI wording allow an effect to be positive or negative, so an uncertain event that could cut costs or speed delivery is also a risk in their wording. Some authors, Baccarini among them, reserve risk for downside and call the upside opportunity. Pick one convention, define it in your opening line, and keep it consistent. Chapter 01 · Risk, Uncertainty and the Language of Risk

Why should objectives be agreed before identifying risks?

Because risk is defined as an effect on objectives, a risk cannot be judged without them. A delay matters only if a deadline is an objective, and a cost overrun only if the budget is fixed. Agreeing objectives first also sets the right level for each statement, since a team objective and a board objective attract different risks and different readers. Chapter 02 · Identifying Risks Against Objectives

What are the eight principles of ISO 31000:2018?

They are integrated, structured and comprehensive, customized, inclusive, dynamic, best available information, human and cultural factors, and continual improvement. All eight serve one purpose, the creation and protection of value. An IRM guide treats the first five as design principles and the last three as operating principles. Chapter 03 · ISO 31000 Principles, Framework and Process

How do you build a 5x5 risk matrix?

Define five likelihood bands and five consequence bands tailored to your organisation, for example probability ranges and dollar or schedule thresholds. Multiply or combine the two ratings for each cell, colour the cells into zones, and agree in advance which zones need treatment and how ties will be broken. Chapter 04 · Qualitative Risk Assessment and the Risk Register

What is the difference between risk mitigation and contingency planning?

Mitigation is action taken before the risk occurs to lower its probability or impact, so its cost is spent whether or not the event happens. Contingency planning prepares a recovery response in advance but only spends money once a trigger shows the risk is happening. Many registers use both on one risk: a preventive step now and a recovery plan ready if prevention fails. Chapter 05 · Risk Treatment and Response Strategies

Why can't a government transfer all project risk through a PPP?

DeGood's analysis of P3 contracts gives two reasons. Contracts are never complete, so a concessionaire can claim that delays are the state's fault, and the I-4 Ultimate agreement listed 24 relief events. Voters also hold elected officials, not contractors, responsible, so the state remains the ultimate guarantor. His conclusion is that a public sponsor ought to refuse a large premium for transfer, because so little risk actually moves. Chapter 06 · Risk Allocation, Transfer and Risk Appetite

How many iterations does a Monte Carlo cost model need?

Baccarini gives 1,000 to 5,000 as typical, with more needed when a model has many variables or rare events in its tails. The unit's Excel notes add that accuracy improves as calculations increase. When comparing two versions of a model, keep the seed fixed so any difference in results comes from the model change, not from a new random sequence. Chapter 07 · Quantitative Risk Assessment and Monte Carlo Simulation

Is project contingency meant to be spent?

Yes, according to AACE, which describes contingency as expected to be expended. It is an estimate line like any other, sized for costs that experience says will arise in total even though no one knows which items will trigger. Treating it as fat to be cut is what makes the topic controversial with management. Chapter 08 · Contingency and Management Reserves

Which shape stands for a decision in a decision tree and which for a chance event?

Squares mark decisions, the points where you choose between options, and circles mark chance events whose outcomes you cannot control. Branches leaving a square are alternatives; branches leaving a circle are outcomes with probabilities. Time runs left to right, so draw the tree in the order events actually happen, then solve it in reverse. Chapter 09 · Decision Trees and Risk-Informed Decisions

How is enterprise risk management different from project risk management?

Project risk management looks at threats and opportunities to one project's objectives. ERM, by contrast, takes an organisation-wide view, links risk to strategy and appetite, and finds shared causes across projects and divisions. Most project managers meet it in earnest when they move to programs or portfolios, but its principles apply at any level. Chapter 10 · Enterprise Risk Management and Risk Governance

What is the difference between vulnerability and resilience in a bow tie?

Barriers on the left of the knot exist to stop control being lost, so their strength describes how vulnerable the system is. Barriers on the right act once the event has happened and limit the damage, like air bags in a crash, so their effectiveness describes how resilient the system is. A sound bow tie needs credible barriers on both sides. Chapter 11 · Resilience, Bow Ties and Learning from Failure

Why do people choose a sure $1,000 over an 80% chance of $1,400?

The gamble has the higher expected value, $1,120, yet most people still take the sure amount. Prospect theory explains this as a strong preference for certainty, and people will give up some expected income to remove doubt. In projects the same tendency shows up as a preference for clear, familiar options over ambiguous ones. Chapter 12 · Risk Psychology and Behaviour

How to study for the exam

Treat the unit as one process you can draw from memory: objectives, identification, analysis, evaluation, treatment, monitoring, communication and recording. For each chapter, keep a single revision card with one definition you can quote exactly, one tool you can run by hand, and one named case you can use as evidence.

Practise the calculations without Excel, because the written exam is one hour and AI is prohibited: score a set of risks, compute an expected monetary value, find a triangular mean, roll back a two-branch decision tree and state a break-even probability. Then practise explaining what each number means for the decision, since the unit's own material stresses interpretation over mechanics.

Use the Week 8 revision question list as a self-test and answer each question in three or four sentences. Because the individual assignment is a hurdle needing 50%, do not leave revision until the week of the exam; spread it across the last teaching weeks while group work is still running. When a concept will not stick, ask Sia to set you a fresh scenario and check your reasoning line by line.

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