Risk Planning
A Risk Plan outlines the foreseeable project risks and provides a set of actions to be taken to both prevent the risk from occurring and reduce the impact of the risk should it eventuate. More specifically, the plan includes:
- A full list of all of the foreseeable risks during the project
- A rating of the likelihood of each risk's occurring
- A rating of the impact on the project should each risk actually occur
- A priority rating of the overall importance of each risk
- A set of preventative actions to reduce the likelihood of the risk's occurring
- A set of contingent actions to reduce the impact should the risk eventuate
- A process for managing risks through the project
Risk Identification
The first step in creating a Risk Plan is to identify the likely risks which may affect the project. A series of risk categories is identified and for each category a suite of potential risks is listed. This may take place during a ‘Risk Planning’ workshop, involving each of the key project stakeholders who are involved in / affected by the project. This may include the project sponsor, manager, team, suppliers, and in some cases, even the customer. Each of the risks identified is described in detail and documented within the Risk Plan.
Definition
Provide a formal definition for the term ‘risk’ for this project.
“A risk is defined as any event which is likely to adversely affect the ability of the project to achieve the defined objectives”.
Categories
Identify the likely categories of risks for this project. Each risk category is a particular aspect of the project which is likely to experience a risk during the life-cycle of the project. Examples of typical risk categories include:
- Requirements
- Benefits
- Schedule
- Budget
- Deliverable
- Scope
- Issues
- Supplier
- Acceptance
- Communication
- Resource
Risk Quantification
The next step is to quantify the likelihood of each risk's eventuating and its impact on the project and surrounding business. Each risk is prioritized according to the likelihood and impact rating and the low, medium and high priority risks are clearly marked for attention.
Probability
Describe the scoring system for measuring the ‘likelihood’ of the risk eventuating. Example:
|
Title |
Score |
Description |
|
Very Low |
20% |
Highly unlikely to occur; however, still needs to be monitored as certain circumstances could result in this risk becoming more likely to occur during the project
|
|
Low |
40% |
Unlikely to occur, based on current information, as the circumstances likely to trigger the risk are also unlikely to occur
|
|
Medium |
60% |
Likely to occur as it is clear that the risk will probably eventuate
|
|
High |
80% |
Very likely to occur, based on the circumstances of the project
|
|
Very High |
100% |
Highly likely to occur as the circumstances which will cause this risk to eventuate are also very likely to be created
|
Impact
Describe the scoring system for measuring the ‘impact’ of the risk. Example:
|
Title |
Score |
Description |
|
Very Low |
1 |
Insignificant impact on the project. It is not possible to measure the impact on the project as it is minimal
|
|
Low |
3 |
Minor impact on the project, e.g. < 5% deviation in scope, scheduled end-date or project budget
|
|
Medium |
5 |
Measurable impact on the project, e.g. 5-10% deviation in scope, scheduled end-date or project budget
|
|
High |
8 |
Significant impact on the project, e.g. 10-25% deviation in scope, scheduled end-date or project budget
|
|
Very High |
10 |
Major impact on the project, e.g. >25%% deviation in scope, scheduled end-date or project budget
|
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