Risk Profiles
Risk to a project can be measured on two major axes: Likelihood of failure and Impact of failure
The more likely a problem is to occur, the more risk it poses to the project. Even fairly minor problems or issues can become a threat to the project if they occur so frequently that they can’t be avoided. Similarly, the impact or consequences of a problem are also important. Some problems can stop a project in its tracks all by themselves.
Many systems exist for categorizing risks into different categories but the one presented here is fairly simple. In this system each risk item is qualified on two scales: likelihood and impact.
Each scale is divided into two simple categories of “ Low ” or “ High ” and risks are rated according to each scale.
A. “ Critical ” issue represents one that will stop the project in its tracks (known as a “Show Stopper”) and must be dealt with immediately.
B. “ Major ” risks represent a significant threat to the project because of their frequency or because of the seriousness of their impact; these threats usually have to be dealt with as soon as possible.
C. “ Minor ” risks which are neither likely nor particularly serious and can be left until others have been dealt with. Minor risks however have an annoying habit of turning into major ones when your back is turned.
Typical actions are as below
Research : The risk is not yet fully understood. Its impact or likelihood of occurrence may be unclear or the context in which it may occur could seem unreasonable. Further research by members of the project team is
warranted.
Accept : The risk is unavoidable and must be accepted as-is. This category of risks become extremely important to a project since they cannot be resolved but still represent a threat to completion. Anticipation therefore become the key to dealing with this category of risk.
Reduce : The risk as it stands is unacceptable. The project team must act to reduce the risk and to establish contingency plans should the risk occur. The risk will have to reviewed in future to define the threat it poses.
Eliminate : The risk is unacceptable under any circumstances and must be eliminated as a possibility. The project team must put in place processes and procedures not only to ensure the immediate threat is eliminated but that it does not re-occur in the future.
Resolution of risks
Once you have profiled your risk they can be ranked into an ordered list representing the various threats to the project to be dealt with. The more significant can then be examined and assigned an action by the project team.Typical actions are as below
Research : The risk is not yet fully understood. Its impact or likelihood of occurrence may be unclear or the context in which it may occur could seem unreasonable. Further research by members of the project team is
warranted.
Accept : The risk is unavoidable and must be accepted as-is. This category of risks become extremely important to a project since they cannot be resolved but still represent a threat to completion. Anticipation therefore become the key to dealing with this category of risk.
Reduce : The risk as it stands is unacceptable. The project team must act to reduce the risk and to establish contingency plans should the risk occur. The risk will have to reviewed in future to define the threat it poses.
Eliminate : The risk is unacceptable under any circumstances and must be eliminated as a possibility. The project team must put in place processes and procedures not only to ensure the immediate threat is eliminated but that it does not re-occur in the future.
