All projects involve risks. The key to successful project management is identifying and documenting risks early on in the project and devising a risk mitigation plan.

Risk identification involves identifying and documenting all the risks that might impact the project. Risk identification is typically done by project team members, key stakeholders, and technical experts. Risk management is an ongoing process as new risks can evolve at any stage of the project life cycle.

The following tools and techniques are used for identifying risks:

Expert Judgement: Experts with past experience of similar projects can help identify risks.

Documentation Reviews: Reviewing documents such as project plans, assumptions, and historical information from previous projects helps in identifying risks.

Information Gathering Techniques: Various techniques such as brainstorming, Delphi technique, and root cause analysis are used for gathering information about risks. These techniques are detailed below:

• Brainstorming: Brainstorming involves gathering experts, team members, and other people who can contribute in identifying risks in a room with the purpose of formulating an exhaustive list of risks for the project. Risks are also categorized and defined in this session.

• Delphi technique: This technique is quite similar to brainstorming with the exception that the participants need not be located at the same place. They participate anonymously. In this technique, a questionnaire is sent to the participants. The responses are summarized and then sent again to the participants. This process is repeated till a consensus is reached. This technique helps in reaching consensus without the participants influencing each other’s opinion.

• Root cause analysis: This method involves analyzing the causes of project risks with the purpose of detailing the risk definition so as to formulate an appropriate response at a later stage.

Checklist Analysis: When working on projects of a similar nature over a period of time, it is helpful to compile a list of generic risks. In subsequent projects, it can be used as a checklist for identifying risks. However, care should be taken not to confine risk identification solely to checklists.

Assumption Analysis: It is always advisable to formulate a list of assumptions for every project. The validity of these assumptions can be used for identifying risks.

Diagraming Techniques: Various diagramming techniques such as cause and effect diagram, and flowcharts are used for identifying risks. The cause and effect diagrams are useful for identifying the effect of one risk on another. Flow charts are useful for identifying the sequence of events in a process and isolating the areas which are prone to risks.

SWOT Analysis: This technique involves evaluating the project using strength, weakness, opportunity, and threat as the parameters for analysis. The SWOT analysis is performed for the project taking the organizational perspective into consideration.

Risk identification might be done in the project planning stage but it is important to continuously define risks in detail as the project progresses.

PM Pathway’s risk register helps to identify, record, rank and mitigate project risks. In conjunction with our other project risk management tools you can plan and run your own risk management workshop.

Matthew PM Pathway, Project Management, Risk Management, Templates

Risk is the probability of occurrence of an event or activity that might have an adverse effect on the project, including on cost, schedule, safety, scope, or quality. It is therefore important to plan for risk management.

Risk management involves identifying risks, analyzing the impact of risks, and subsequently devising a risk response plan. Quantitative risk analysis involves assigning numeric ratings to the identified risks to demarcate high and low value risks.

The basic purpose of performing a quantitative risk analysis includes deriving:

* A prioritized list of quantified risks;

* Quantified cost and time contingency reserves; and

* The probability of meeting cost and schedule requirements for the project.

For quantifying risks, the following details are required:

* The exhaustive list of risks;

* The tolerance limits of the stakeholder;

* The cost estimate for all the resources required to complete the project; and

* The time estimate for completing all the activities of the project.

Once the above listed details are available, Quantitative Risk Analysis can be performed using the following tools and techniques:

Assessing: This is a data gathering phase in which stakeholders and project team members met to discuss information about past project experiences and their relevance to the project risks. The information to be documented will depend on the kind of probability distribution that will subsequently be used for analyzing the results. This information can also be used for verifying the credibility of the analysis.

Valuing: The expected monetary value is calculated by multiplying the probability of occurrence of a risk event with the value of the risk event. If cost is a major governing factor for the project, then the risks with higher expected monetary value need to be addressed as a priority.

Simulation: While performing a simulation, a model of the system or process is used to derive the expected results. The Monte Carlo analysis can be used to quantify risks.

Decision Tree Analysis: The decision tree is a useful tool for choosing an option from various alternatives. It is used to explore different options and the outcome of selecting a specific option.

Sensitivity Analysis: This technique is used to determine the risks which are likely to have the highest impact on the project. In sensitivity analysis, the effect of each risk is examined while keeping all other uncertain elements at baseline values.

It is important to observe the trends which are likely to appear during Quantitative Risk Analysis. Monitoring risks gives the opportunity to perform further analysis of the risks that pose the maximum threat to the project and then devise an appropriate risk response plan and also to determine the effectiveness of risk mitigation strategies.

PM Pathway’s risk management tools are designed to facilitate the determination of project risk consequence levels, record project risks and mitigation strategies and determine residual project risk, all in an easy reporting format.

Matthew PM Pathway, Project Management, Risk Management, Templates