Risk: Explicit vs. Implicit

Known globally as The Risk Doctor, David has been working in risk management for about 30 years. He has worked in 48 countries on every continent except the Antarctic (too cold!), with clients in most industries.

  Risk Management   ProjectsAtWork  

Compiling a list of risks for your project doesn’t address “how risky” your project actually is. This requires an understanding of the dual concept of individual (explicit) and overall (implicit) project risk. It is vital that project managers take action at both levels.

Have you ever been asked “How risky is your project?” Most project managers find it hard to answer this question. Your Risk Register lists all the risks you’ve identified, and these are prioritized for attention and action, with responses and owners allocated to each risk. But how can a list of risks answer the “how risky” question? We need a different concept to describe the overall risk exposure of a project, which is different from the individual risks that need to be managed.

Project Management Institute (PMI) has addressed this issue in the Practice Standard for Project Risk Management, which has two distinct definitions of risk. The first is individual risk, which is defined as “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.” It also defines overall project risk as “the effect of uncertainty on the project as a whole.” The UK Association for Project Management (APM) also has two similar definitions of risk in its Body of Knowledge.

This dual concept of risk is important…

Please log in or sign up below to read the rest of the article.