What is Risk?

Risk is the effect (positive or negative) of an event or series of events that will have an impact on a project. Purpose:

  • The purpose of Risk Analysis is to identify potential problems to help avoid or reduce their effects.
  • If it is a positive opportunity, then take advantage of it should it occur.

Risk Affects Project Planning

  • An important part of planning a project.
  • Helps to prevent turning small problems into emergencies.
  • Primarily part of Planning phase.
  • Continues to change through the whole project.

Risk is Made Up of

  • Event: What could happen?
  • Probability: How likely is it to happen?
  • Impact: How bad will it be if it happens?
  • Mitigation: How can you reduce the probability (and by how much)?
  • Contingency: How can you reduce the impact (and by how much)?

Create a Risk List

For each event on the risk list:

  • Describe the risk event briefly. (1 – 2 sentences)
  • What is the probability of the risk. (High, Medium, Low)
  • Mitigation is about reducing the probability that a risk will occur.
  • What is the impact of the risk on the project. (High, Medium, Low)
  • Contingency is about reducing the impact if the risk does materialize.

What is the Probability?

  • Probability as High, Medium or Low.
  • Do mitigation for High and Medium elements first
  • You might want to mitigate Low risk items.
    • Note: If the probability of an event occurring is zero, then remove it from consideration. There is no reason to consider things that simply cannot happen (Enraged T-Rex eats the computer).

What is the Impact?

  • Impact as High, Medium or Low
  • High – cause major damage possible failure of project.
  • Medium – some effect to project that could increase cost or delay delivery.
  • Low – minor effect but must still be dealt with to avoid it getting worse.

Example of a Risk Event

  • Event: Critical parts you need do not arrive on time.
  • Probability: Medium
  • Mitigation: Order parts early in the project.
  • Impact: High
  • Contingency: Use old, existing parts while you are waiting for the new ones.

What to do?

  • Discuss with team members ideas.
  • Keep reasonable risks (start with most important first)
  • Discard silly or risks that no longer apply.
  • Remember this process continues through the entire project.

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