Original subtitles

Welcome to Part B of Session 1 in Project Risk Management.

In this section, we'll take a closer look at the key risk concepts and how

connect to portfolios and programs.

By the end, you will see how project risks are just one part of a much bigger

picture that includes portfolio and enterprise -level risks.

Before we dive deeper, let's quickly review key definitions.

An enterprise is a bundle of projects, programs, and other activities.

A portfolio is a group of projects, programs, and operations managed

achieve strategic objectives.

A program is a set of related projects managed in a coordinated way to gain

benefits not possible by managing them individually.

A project is a temporary endeavor to create a unique product, service, or

result. And finally, a product is a set of tangible outcomes, either as a

standalone item or component of something larger.

Let's walk through this example to understand how projects, programs, and

portfolios are organized in a large industrial company.

At the top, we have the enterprise, which in this case is a large

company. This company manages several portfolios, and here we are focusing on

the industrial products portfolio.

Within this portfolio, there are multiple programs, like the agriculture

machinery program, the electric vehicle parts program, and the industrial

electronics upgrade program.

Each program includes a set of related projects.

For example, in program 1, we see projects focused on designing and

advanced tractors and harvesting machines.

These projects lead to the creation of final products, like smart tractor

modeling and automated crop harvester model Y.

And it is important to note that some products, such as the next -generation

smart agricultural vehicle in this example, may be the result of multiple

projects working together, not just one.

As you can see in this table, projects, programs, and portfolios have different

focuses in terms of scope, planning, management, monitoring, and success

criteria.

Projects deal with specific objectives.

programs coordinate related projects to deliver greater benefits, and portfolios

align everything with the organization's strategic goals.

We will keep this in mind as we move forward, especially when we talk about

risks behave differently across these three levels.

As you can see, risks can exist at every level, enterprise, portfolio, program,

project, and even the product itself.

A single project might impact the value of an entire portfolio or program

depending on how risks are managed.

Sometimes risks can enhance the outcomes, but they can also reduce the

benefits if not handled properly.

That's why it is important to understand where risks live and how they connect

across different levels of the organization.

When managing a portfolio, risks are viewed in aggregate, not just at the

of each individual project.

The overall portfolio risk depends more on the average performance of all

projects rather than the full success or failure of one of them.

In most cases, the main goal of a portfolio is financial, meaning it is

to generate revenue or profit.

As shown in the chart, projects can vary in both their risk level and the rate

of return.

For example, project C has low risk and high return, which is ideal.

We also have project D and E show higher risk even though their return is also

great. Another important point is that projects in a portfolio often affect one

another. So if one project experiences trouble, it can create a ripple effect

and increase the overall risk for the entire portfolio.

At the enterprise level, risks are broader.

They still include financial objectives, but also cover strategic risks,

regulatory compliance, and potential disasters such as natural or technical

like data breaches.

Enterprise risk management is a strategic approach to identifying and

for any potential threat that could impact organizational operations and

objectives.

Project teams work closely with stakeholders to understand two critical

elements, risk appetite and risk thresholds.

Risk appetite is the amount of uncertainty an organization is willing

to achieve a reward.

Risk threshold defines the acceptable variation around objectives based on

appetite. For example, a plus -minus 5 % threshold around a cost objective

reflects a lower risk appetite compared to a plus -minus 10 % threshold.

Let's look at this example to better understand how risk appetite and risk

thresholds work in practice.

Imagine a project team is responsible for building a bridge.

When they engage with the stakeholders, they found that the stakeholders are

willing to accept a small amount of risk to finish the project faster even if it

slightly increases the cost.

This describes their risk appetite, a willingness to accept some uncertainty

without significantly exceeding the budget.

At the same time, the stakeholders define a clear risk threshold.

A cost increases of up to plus minus 5 % from the original budget is acceptable.

It means that if the cost goes beyond this threshold, it will not be

anymore, and additional management actions or formal approvals would be

required. This example shows how understanding both risk appetite and

thresholds helps guide project decisions.

And this brings us to the end of Part B. If you have any questions, feel free to

ask or post them in the discussion board.

Before moving on, please take a few minutes to review the Scenario 1

Thank you very much again for watching this video.