Wednesday, August 30, 2023

PfMP Exam Prep: Fundamentals of Portfolio Risk Management

Portfolio Risk Management differs significantly from project and/or program risk management. While there are similarities among the processes, procedures, actions in risk management, risk management in portfolio differs in many areas. In this article we will learn the foundational aspects of portfolio risk management.

Portfolio Risk Definition

As per PMI, following is the definition of Portfolio Risk:

An uncertain event, set of events, or conditions that, if they occur, have one or more effects, either positive or negative, on at least one strategic business objective of the portfolio. 

Re-read it again! It looks similar to the definition of project risk in that a risk is an uncertain event or condition, if it occurs, will positively or negatively impact one or more objectives of the project. 

However, considering a portfolio, the considerations are not with respect to just objectives, but strategic business objectives. Why so?

Because a portfolio is different from the project. A portfolio is a collection of projects, programs, sub-portfolios managed as a group to achieve the strategic business objectives of the organization. 

Hence, as you can see, the definition speaks about at least one strategic objective. If the uncertain event/condition doesn’t impact one, then it’s NOT a portfolio risk!

Another aspect is with respect to the set of events. A portfolio can have a number of components, such as projects and programs as depicted in the below figure. 


There will be intra-dependencies among the components of the portfolio. At the same time, a group of initiatives taken by an organization can be clubbed to form a portfolio. There can be many such initiatives. So, there can be interdependencies among the portfolios. 

Considering both interdependencies and intra-dependencies (mentioned in the PfMP exam's ECO or Exam Content Outline), you can have a set of events.  

Portfolio Risk Management

Next, you’d be wondering about Portfolio Risk Management. Again, let’s start with the definition. 

Considering the Standard for Portfolio Management, Portfolio Risk Management is a knowledge area with processes to develop the Portfolio Risk Management Plan and manage the portfolio risks. 

I’ll define Portfolio Risk Management as follows:

Portfolio Risk Management consists of a set of processes to conduct risk management planning, risk identification, risk assessment, risk response and risk monitoring of a portfolio.

As you can notice in the definition, Portfolio Risk Management consists of the key areas of planning, identification, assessment, response as well as monitoring. 

The Standard for Portfolio Management, 3rd edition has two processes for it as shown in the below figure.  

While the process of “Develop Portfolio Risk Management Plan” creates the Portfolio Risk Management Plan, the process of “Manage Portfolio Risks” creates the needed risk related files such as Portfolio Risk Register and Portfolio Risk Reports. 

These are separate and independent documents and part of Portfolio Process Assets. Portfolio Risk Reports can also be part of Portfolio Reports, which is a must-know as you prepare for your PfMP exam.

The objectives of Portfolio Risk Management are to increase the probability and impact of positive events and decrease the probability and impact of negative events to the portfolio value, strategic fitness of the portfolio and optimization/balancing of the portfolio. 

Next, let’s see the differences between Portfolio Risk Management and Project Risk Management. 

Differences: Project Vs. Portfolio Risk Management

There are a number of differences, in fact a very large number of them. I’ve outlined a few of them in the below table.


Indeed, there are a lot of differences between portfolio risk management and typical project/program management. Some differences are completely unique, for example, equity protection at the portfolio level. There are also quite a few similarities, but as I’ve noted earlier while managing risks for the portfolio, your thinking and mindset has to be different. 

To know and understand portfolio management with a single figure, you can refer to this article. 

Portfolio Management - One Figure That Says it All!

I hope this article gives you the fundamental understanding with respect to Portfolio Risk Management and you understand the intricate basic differences between portfolio and project risk management. 

To have a detailed understanding on Portfolio Risk Management, you can refer to the newly available book: I Want To Be A PfMP. 


[1] PfMP Exam Prep Book – I Want To Be A PfMP, the plain and simple way, by Satya Narayan Dash

[2] Article: Portfolio Governance Management - Key Governance Processes and Interactions, by Satya Narayan Dash

[3] Article (Book Excerpts): Understanding Portfolio Strategic Management, by Satya Narayan Dash

Wednesday, August 23, 2023

Book Excerpt from 'I Want To Be A PfMP' – Life Cycles and Component States in Portfolio Management

This article is an excerpt from the Book - I Want To Be A PfMP

It is from Chapter – 2: Portfolio Management and Organization. 

For the index of the book, refer: Book Index - I Want To Be A PfMP. 


“The velocity of portfolio components’ completion determines the velocity of the organization.”

- Yogic Quote

You would be hearing these terms “organizational velocity” and “velocity of portfolio component’s completion” for the first time. But most of you would have heard the terms "speed" and "velocity". However, there is a subtle difference between speed and velocity. 

Speed is a scalar concept, whereas velocity is a vector concept. Speed tells how fast you are moving or covering a distance, whereas velocity tells how fast you are moving in a particular direction. Speed is direction agnostic, whereas velocity is direction aware.

But what does it have to do with portfolios, their management and organization? 

When I say velocity of a portfolio component’s completion, it means how fast we are completing a portfolio component, be it programs or projects. This in turn informs how fast the strategic objectives of an organization are being met, i.e. the organizational velocity. Because, as we have seen before, it’s portfolios of programs, projects and operations that achieve an organization’s strategic goals and objectives. This in turn leads to realization of an organization’s mission and vision. The vision is the direction of the organization. Portfolio and its components are geared towards it! 

The velocity of portfolio components’ completion determines the organizational velocity because portfolios represent organization's intent (strategic), direction (vision) and progress (performance).

Hence, it’s important to know portfolio management from an organizational perspective. 

Portfolio management happens in an environment broader than the portfolio itself. At the same time, portfolios operate within the value boundary of an organization.

In this chapter we will learn more on portfolio management and organization, organizational influences, roles of portfolio manager, among others.

2.1 Life Cycles

In the context of portfolio, portfolio management and associated processes, one can think of three life cycles. 

  • Portfolio Life Cycle
  • Portfolio Component Life Cycle within Portfolio
  • Portfolio Management Life Cycle

There is also another cycle called Portfolio Management Process Cycle. 

To understand the first three, we need to first understand what a life cycle is. The life cycle is the time-span from the beginning of life to the end of life. In other words, one can say, the life cycle constitutes a set of states or stages from the beginning of life to the end of life.

Between portfolio life cycle, portfolio component life cycle (within a portfolio) and portfolio management life cycle there are subtle differences:

  • Portfolio life cycle is obviously the life cycle of the portfolio. It’s managed by the Portfolio Manager.
  • When I say portfolio component life cycle, it’s actually the life cycle of the portfolio components within the portfolio
  • When I say portfolio management life cycle, it’s actually a set of processes to manage the portfolio

In the SPfM3, only Portfolio Life Cycle is briefly mentioned, where others are not. Rather, we have a Portfolio Management Process Cycle. We see them all! 

2.1.1 Portfolio Life Cycle

Portfolio life cycle can be defined as follows: 

“A life cycle of the portfolio from its beginning to closure.” 

Though portfolios are ongoing in nature, it also can get closed. When a portfolio is closed, the life cycle of the portfolio ends. 

2.1.2 Portfolio Component’s Life Cycle within Portfolio

A portfolio component passes through many states from initiation to authorization, within the portfolio. The components states are mentioned in the below table.

As you can the components are going from collection, initiation to authorization. Once authorized, a portfolio component’s management is taken over by the component manager, such as program manager or project manager. 

“A component life cycle within the portfolio consists of states or stages from collection, identification, categorization, evaluation, selection, prioritization, balancing to authorization of the component.” 

When the project or program is authorized, then that portfolio component’s life cycle within a portfolio comes to a closure. Beyond that, it becomes a project life cycle or the program life cycle. 

However, the status or performance of the components is reviewed by the portfolio manager and reports (feedback) are given by the respective program or project managers to the portfolio manager. This leads to the Portfolio Management Life Cycle. 

2.1.3 Portfolio Management Life Cycle

While the Component Life Cycle within a portfolio is about the states involved, Portfolio Management Life Cycle is about the processes used to manage those states. 

. . .

. . . 


Going forward in the book, you will learn the Portfolio Management Life Cycle with examples and how it’s different from other life cycles that we just learned. 

You will also learn Portfolio Management Process Cycle (notice that I didn’t use the word “life cycle”), Go/No-Go decisions and integration of portfolio management processes with organization’s processes. 

You will also learn Portfolio Management Process Implementation, Portfolio Stakeholders (all of them), Portfolio Governance, Role of Portfolio Manager, Portfolio Process Assets, Portfolio Documents, among many others in the following sections. 

  • 2.2 Portfolio Management Process Implementation
  • 2.3 Portfolio Stakeholders
  • 2.4 Portfolio Governance 
  • 2.5 Role of Portfolio Manager
  • 2.6 Role of PMO in Portfolio Management
  • 2.7 Portfolio Management Common Inputs and Outputs

Many get confused between Portfolio Process Assets (PPAs) and Organizational Process Assets (OPAs), or Portfolio Documents and Portfolio Process Assets. These are clearly differentiated with detailed explanations and number of tips.

For price, access, and other details of this new PfMP book, you can refer to this page.

Book Available for PfMP Exam:

Sunday, August 20, 2023

Book Excerpt from 'I Want To Be A PfMP' – Understanding Portfolio Strategic Management

This article is an excerpt from the Book - I Want To Be A PfMP

It is from Chapter – 4: Portfolio Strategic Management. 

For the index of the book, refer: Book Index - I Want To Be A PfMP.


Strategic Management is a critical process group in Portfolio Management. As we have been seeing from the very beginning, it’s a portfolio which links the organization’s goals and strategy with the program components or project components. That’s one of the key characteristics of portfolio management.

For your PfMP exam too, you will have a large number of questions (25%) from this group or Strategic Alignment performance domain as mentioned in the ECO. The other one is Portfolio Performance domain (25%).

Portfolio Strategic Management includes three processes to develop these three key artifacts or deliverables:

  • Portfolio Strategic Plan (PfSP)
  • Portfolio Charter (PfC)
  • Portfolio Roadmap (PfRM)

It also ensures management of strategic changes. When a strategic change happens at the organizational level, with portfolio strategic management you ensure that the portfolio remains aligned with organizational strategy. 

Also, it’s possible that there will be changes in portfolio components such as programs, projects, and subportfolios. This also has to be managed so that these portfolio components and hence the portfolio remains aligned with strategy. Both changes to strategy and changes to the portfolio itself (due to change in portfolio components) are managed by another process in strategic management. 

The processes in this KA with the corresponding PG are noted in the below table.

4.1 Portfolio Strategic Management – What Happens?

Let’s take an overview of Strategic Management KA. 

  • First, in the process of “Develop Portfolio Strategic Plan” the “Portfolio Strategic Plan” (PfSP) is developed. To create this plan, mainly the inventory of work and organizational strategic goals and objectives act as inputs from the outside. This plan has portfolio-related strategic goals and objectives.

    In this process too, the “Portfolio” is first created. It’s a list of components such as projects, programs and operations, but without any hierarchy or organization.

  • Next, the PfSP acts as an input to “Develop Portfolio Charter”, to create the “Portfolio Charter”. The charter authorizes the Portfolio Manager to apply resources to portfolio components and execute the portfolio management processes. The charter provides the “Portfolio Structure”, which shows the hierarchy and organization of portfolio components.

  • Then the “Portfolio Charter” acts as an input to the “Define Portfolio Roadmap” process, where the “Portfolio Roadmap” is created. The roadmap chronologically depicts all portfolio elements. This is also a high-level schedule with a timeline for all portfolio components.
  • The final process of “Management Strategic Change” is an umbrella process, which sits on top and interacts with the previous three processes. When there are strategic changes in the organization, this process is activated and it results in changes to the PfSP, Portfolio, Portfolio Charter (which includes the Portfolio Structure), and the Portfolio Roadmap.

    Strategic change can also come due to change in portfolio components. The portfolio reports are reviewed in “Provide Portfolio Oversight” process by the governing body under Governance KA. If any strategic change, then this process of “Manage Strategic Change” is executed. This is shown with dotted lines in the below figure. This will result in updates to the PfSP, PfC and PfRM.

    This also results in updates to the Portfolio Management Plan (PfMP), which is created in “Develop Portfolio Management Plan” under Portfolio Governance KA. This is shown again with dotted lines

4.1.1 Portfolio Strategic Management – Graphical Process Interaction 

The interactions among the processes of Portfolio Strategic Management KA are shown in the below figure.

As shown, the inventory of work (an initial list of non-final and immature collection of components) and organizational strategy and objectives act as into to “Develop Portfolio Strategic Plan” process, which creates the Portfolio Strategic Plan (PfSP) as well as an initial list of components, now aligned with the strategy and objectives.

Next, the PfSP acts as an input to “Develop Portfolio Charter” process, which creates the Portfolio Charter (PfC). This charter is now input to the Develop Portfolio Roadmap” process, which creates the Portfolio Management Plan (PfMP). 

If any organizational strategy change happens (shown in the cloud), they will be managed with the “Manage Strategic Change” process. New strategic changes can also come due to updates coming from “Provide Portfolio Oversight” process, which has Portfolio Reports as input. 

Finally, to accommodate the strategic changes, the PfSP, PfC, PfRM, Portfolio as well as the PfMP will be updated in the “Manage Strategic Change” process.

. . . 

. . .

4.2 Strategic Management and PfMP Exam ECO 

Per the PfMP-ECO, this performance domain has activities for aligning portfolio components such as projects, programs, operations with the organizational strategic objectives, goals and priorities. It also recommends portfolio scenarios and related components to create an initial high-level roadmap. 

4.2.1 Strategic Management Process Mapping to ECO’s Domains and Tasks 

The PfMP exam is based on ECO and hence, the below table. This shows mapping of simplified tasks (statements) to the processes of this KA. 

. . . 

. . .


Going forward in the book, you will learn more on Portfolio Strategic Management, ECO Mapping, the processes in Portfolio Strategic Management along with the Inputs, Tools and Techniques (ITTOs) and top activities for each process. 

You will also learn in-depth about the Portfolio Strategic Plan and its contents, Portfolio Charter and its contents, Portfolio Roadmap and its content. You will also learn how Portfolio Roadmap is used with a hands-on MS Project-Portfolio Management software tool. These are covered in the following sections.

  • 4.3 Develop Portfolio Strategic Plan
  • 4.4 Develop Portfolio Charter
  • 4.5 Define Portfolio Roadmap
  • 4.6 Manage Strategic Change

Towards the end you will understand how strategic change management happens and the differences between Progressive Elaboration and Repeated Adaptation in new sections. Both progressive elaboration and repeated adaptation are used in Portfolio Management.

For price, access, and other details of this new PfMP book, you can refer to this page.

Book Available for PfMP Exam:

Tuesday, August 15, 2023

New Book for PfMP Exam Prep: I Want To Be A PfMP, The Plain and Simple Way to be a PfMP

It gives me a lot of pleasure in announcing the public availability of the book for Portfolio Management Professional (PfMP®) examination preparation:

'I WANT TO BE A PfMP - The Plain and Simple Way to be A PfMP'.

The PfMP certification is the highest-level certification offered by Project Management Institute (PMI®). However, unlike program, or project management and associated certifications, portfolio management is completely different. In fact, the mindset and thinking for it is so different that if you go with a program, or project management mindset, you may not be able to clear the PfMP exam!

You can learn more on PfMP certification here.

Every organization operates to create and sustain business value. To have value, an organization develops a strategic plan with strategic goals and objectives. However, an organization’s leadership can only achieve its strategic business objectives with portfolios. 

Another aspect is organizational velocity, which is my term. Velocity of an organization is determined by the velocity of the portfolio component's completion. It is portfolio management, which ensures the inclusion of right portfolio components holding highest strategic value are undertaken from various business units. This in turn enables organizational velocity.  

To make their organizations successful, C-suite executives or aspiring C-suite executives have to be deeply involved in the success of portfolio management. Because only portfolios drive the organization forward by accomplishing business objectives, providing maximum value within the organization's risk tolerance.

While teaching aspiring PfMPs and practicing multiple portfolio management software tools over years, I realized there is no book which covers portfolio management with real-world examples and hands-on software tools. In addition, not a single PfMP book covers various portfolio management standards from PMI, other needed publications (or books) and the Examination Content Outline (ECO for PfMP exam). 

This book, I Want To Be A PfMP – the plain and simple way to be a PfMP, covers multiple standards, books and references. This book also contains a lot of tips, tricks, questions, and real-world examples with usages from multiple portfolio management software tools. 

Key Features of This Book – I Want To Be A PfMP

  • In-line with the Standard for Portfolio Management, third (SPfMv3) and other editions as needed with all knowledge areas, processes groups, processes, portfolio and portfolio management fundamentals and advanced portfolio management concepts. 
  • In-line with the PfMP Exam Content Outline (PfMP-ECO) and other needed PMI standards such as the Standard for Risk Management in Portfolios, Programs and Projects. For every domain and associated tasks, clear mapping tables between SPfM and ECO are provided with explanations.
  • 100s of Yogic Tips and Revision Questions to crack the PfMP exam. This includes inputs from successfully certified PfMPs.
  • 220+ practice questions, including one full-length question and answer set. Feedback has been taken from certified PfMPs.
  • 18 videos (over 1.5 hours duration) in complex and complicated areas of Portfolio Management such as: 
    • Portfolio Process Interactions, Process Sequencing,
    • Portfolio Earned Value Management (PEVM), 
    • Portfolio Monte Carlo Analysis (PMCS), 
    • Portfolio Efficient Frontier (PEF), 
    • Portfolio Risk and Advanced Risk Management, among others.
  • Numerous flow-diagrams to clearly understand various PfMP concepts. Some areas of portfolio management can be quite complex to understand, e.g., Portfolio Governance Management. 
  • Focus on Inputs, Tools & Techniques and Outputs (ITTOs) for the portfolio management processes. This will be an important part for your PfMP exam prep.
  • Highly simplified content and language. The book focuses on what you need to know for the PfMP exam and is written in easily understandable content. 
  • Wide usage of various Portfolio Management Software tools such as MS Project-Portfolio Management, Oracle Primavera Project-Portfolio Management, Primavera Portfolio Management, and MS Excel.
  • A dedicated chapter for various portfolio financial calculations, charts used in portfolio management such as bubble charts, matrix bubble charts, S-curves, portfolio efficient frontier curves, and portfolio burndown/burnup charts.  

Overall Content of the Book

  • Number of Chapters: 10 (+2)
  • Number of Pages: 406 
  • Number of Questions: 221
  • Number of Videos: 18
  • Number of Full-Length Question and Answer Set: 1
    • One full-length question set, with 170 questions and detailed answers
    • Extensive usage of practical, hands-on portfolio management software tools in the questions

The price, and access details for this book are available at:

In the above link, you also have the payment modes and link.

To know the breakdown content of the book, please check the below index. 

Index of the Book

The complete index of the book is shown below (Embedded Document). You can scroll to see the content. 

If you are want to buy or have any queries on  this book, please send an email to

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