Chapter 10. Project Risks
A more disciplined process involves using checklists of potential risks and evaluating the likelihood that those events might happen on the project. Some companies and industries develop risk checklists based on experience from past projects. These checklists can be helpful to the project manager and project team in identifying both specific risks on the checklist and expanding the thinking of the team. The past experience of the project team, project experience within the company, and experts in the industry can be valuable resources for identifying potential risk on a project.
When risks are identified, they are recorded in a risk register. It is a key tool that helps project teams keep track of the status of risks, ensure response plans are effectively implemented, and new risks are managed. The register is an output of the process of identifying project risks. The project charter can involve some of the risks, generally the overall risks. After the WBS and activity list are created, and the schedule, resources and cost are estimated for all the activities, the project team can identify the risks more easily. Project team must review this register periodically by assigning each risk to a team member.
Risk register can be composed of the items below:
- Risk ID
- Related WBS activity or activities
- Risk owner (Name of the team member who monitors the risk)
- Risk trigger (How do we know the risk is becoming an issue or has reached a point that requires action?)
- Risk category (based on RBS categories)
- Probability (How likely does the risk occur?)
- Impact (How will the risk affect the project if it occurs? E.g., schedule delay, budget overrun, quality issues)
- Probability-Impact Score (Multiplying probability percentage by impact percentage)
- Risk response strategy (see 10.5)
- Description of the response (see 10.5)
- Response owner (if different from the risk owner)
- Expected impact of the response (What result do we expect from the response?)
Table 10.2 illustrates a short version of a sample risk register for Grocery LLC’s M-Commerce Project. Only six columns have been included in this risk register.
Table 10.2: An Example of a Risk Register
|Related WBS Activity
|Cost estimates may be exceeded considering the factors of inflation and foreign exchange currency rates.
|Systems Analyst 1
|If the CPI (cost performance index) drops below 0.90, we will need to seek additional funding from management.
|The demand on the developers increased recently since the demand for online games and mobile apps have been on a sharp rise after the emergence of COVID-19 pandemic. We may experience a shortage of developers in the market.
|Systems Analyst 2
|Ten days before the “Analysis/App Requirements” component starts, we must assure that Developer 1 starts working in project activities.
|Management & Technical
|Risk of building an app that our target users don’t want.
|Project manager should review each activity’s tasks and performance with the core team and the project sponsor to detect any potential risks.
Weekly risk review meetings