PROJECT RISK IDENTIFICATION

"Nothing Great comes out without a risk" - Brad Taylor

Risk is all around us. Everything in life comes with a risk. The higher the risk higher the reward applies to stock/financial market investment scenarios but not for projects. In the case of a project, the Risks have to identified and mitigated for it to be successful.

Identifying Risk is the process of Identifying individual project risk as well as overall project risk and documenting them in a consistent fashion.

When to Identify Risks

The risk has to be identified at all stages of the project, as it's an iterative process, but the risks are always greatest at the beginning of projects. At the beginning of the project, the uncertainty is high because of a lack of information at the beginning of the project.

Successful project management lies in identifying and managing risks. Let's look at some tools and techniques to identify project risks.

Ways to Identify Project Risks

There are numerous ways to identify risks. Here are some risk identification techniques:

1. Interviews. Select key stakeholders. Plan the interviews. Define specific questions. Document the results of the interview.
2. Brainstorming: This is a technique used at the start of the project where all stakeholders and team members are gathered in a meeting fashion in the presence of a facilitator. For successful Brainstorming includes preparing questions in advance so that participants can concentrate on the core of the idea, rather than on generating ideas. Some pointer for ideas include

• most significant risks related to schedule, budget, quality, scope or resources, etc

1. Checklists: See if your company has a list of the most common risks from past projects. If not, you may want to create such a list(excel works fine). After each project, conduct a post review where you capture the most significant risks. This list may be used for subsequent projects.
2. Assumption Analysis: The PMI defines an assumption as “factors that are considered to be true, real, or certain without proof or demonstration.” Assumptions are sources of risks. Project managers should ask stakeholders, about the past and present assumptions the stakeholders might have concerning the project?” Furthermore, document these assumptions and associated risks. Since if the Assumption is not true this might impart significant risk to the project.
3. Cause and Effect Diagrams: Cause and Effect diagrams are powerful. Project managers can use this simple method to help identify causes--facts that give rise to risks. And if we address the causes, we can reduce or eliminate the risks.
4. SWOT Analysis: The Project manager should include SWOT ( Strength, Weakness, Opportunities, and Threats). Strength and Weakness are referred to as internal factors and Opportunity and Threat are referred to as external factors.
5. Affinity Diagram: Participants are asked to brainstorm risks. Then participants sort the risks into groups or categories. Lastly, each group is given a title.

Write Clear Risk Statements

As you identify risks, you will need to write and capture identified risk in your risk register.

Risk Identification Mistakes

The majority of all risks can be eliminated or greatly reduced through basic risk management.

Some risk identification mistakes:

1. The failure to recognize risks early when it is less expensive to address.
2. Risks are not identified with appropriate stakeholders.
3. Not using a combination of risk identification techniques as stated above.
4. Not communicating the risk and failure to make the risks visible and easily accessible.

What is your risk Identification technique?? What works and what does not??

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