Getting Risk Identification Right
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By Mario Trentim
While uncertainty can influence project outcomes, contingency and proper risk response planning can decrease the potential sting. But, despite the rich theoretical background and defined best practices that have been developed for risk management, it remains a struggle for most organizations and project managers.
Why? Here are three reasons I often see:
- It is not always well understood what a risk is—that it is an uncertain event that impacts one or more of the project objectives. Risks must be specific. Economy, for example, is not a risk; it is a category of risks. Instead, a specific risk might be currency exchange rates if you are importing expensive equipment from abroad.
- Most project managers perform risk management to comply with organizational standards—in other words, they execute it because they have to, not because their projects would benefit from doing so.
- Risk identification demands proper tools but the most widely used tool for risk identification is the least effective: brainstorming. Facing a blank flipchart and imagining what could possibly go wrong in the project is a huge waste of time if used alone because it is sure to leave many risks uncovered.
Effectively Identifying Risks
Risk identification demands effort and time. It is easy to overlook risks in the first pass. That’s why it should be reviewed periodically throughout the entire project life cycle.
According to Rita Mulcahy in her book Risk Management, Tricks of the Trade, if you identified less than 300 project risks, you did a poor identification. To identify more risks (and exceed Ms. Mulachy’s target) try these three tips:
1) Review all documentation, including:
- Contracts, agreements, quotes and specifications
- Project charter and project management plan
- Project documentation (WBS, schedule, resources, etc.)
- Assumptions and constraints analysis
2) Utilize various information-gathering techniques:
- Delphi technique, facilitated workshops, interviews or questionnaires
- SWOT Analysis
- Benchmarking
- Expert judgment
- Risk Inspection
- HAZOP: Hazard and Operability Studies
- HAZAN: Hazard Analysis
3) Try different diagramming techniques, such as:
- Cause and effect diagrams
- Fault Tree Method
- Flow charts (system or process)
- FMEA: Failure mode and effects analysis
- Influence diagrams (graphical representations of situations showing causal influences or time ordering)
- Organizational process assets
- Checklists and categories
- Risk Breakdown Structure
- Historical information
- Lessons learned
- Hazard indices
How familiar are you with these tools? Which do you find the most useful? Is there another you would recommend? I look forward to your comments!
Posted
by
Mario Trentim
on: August 13, 2016 07:40 AM |
Permalink
Comments (10)
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Like that quote: "According to Rita Mulcahy in her book Risk Management, Tricks of the Trade, if you identified less than 300 project risks, you did a poor identification". It is certainly true for initial risk identification during planning, and you already should have high level risks from the Charter!
I think what is missing from this list is how to encourage continuous risk identification during the project.
What would be tools&techniques doing that? Like
- having a slot on project meetings dedicated to risk identification?
- Requiring all reviews to explicitly identify risks?
- Looking at existing risks and detail them break them down in more specific risks?
- if you found a risk event with negative impacts on the project - think hard to find also positive impacts
Vincent Guerard
Coach - Trainer - Speaker - Advisor| Freelance
Mont-Royal, Quebec, Canada
Interesting, like Thomas I like the Quote concerning the 300 project risks.
What I didn't see is looking at performance for completed part and making simulation on the remaing project, On large project it is a great tool.
Mario Trentim
CEO| PMO Global Alliance
Sao Jose Dos Campos, Sao Paulo, Brazil
Hi Thomas, you're totally right. In fact, I wrote a series of articles on risk management.
This is the first one focused on risk identification. Then, I explore risk analysis. In a third article, risk responses planning and risk control. I was going to mention in controlling risks that it is extremely important to identify new risks, reassess current risks and review response plans.
Encouraging continuous risk identification is crucial to project success.
Thanks for your comments.
Mario Trentim
CEO| PMO Global Alliance
Sao Jose Dos Campos, Sao Paulo, Brazil
Vincent, thanks for your comment. As I mentioned to Thomas, I left analysis, responses and control for future articles. But you have a point here, simulation, modelling and quantitative methods are very useful in large projects.
Thejassu Raghavan
Engagement Manager in Agile environment| WinWire Technologies Ltd
Bangalore, India
Good article. Thanks Mario.
I have not read Rita, so not sure about the count 300. But depending upon the point in life cycle of the project, doesn't the probabilities change ?
Mario Trentim
CEO| PMO Global Alliance
Sao Jose Dos Campos, Sao Paulo, Brazil
Hi Thejassu. I guess that was her way to stress the need for specific risks in a thorough identification. You don't have to stick to that number. Depending on the project size, characteristics and complexity, there might be more risks or less risks.
Good Article.
This is true basically people tend to leave proceed with brain storming and organization assets. It needs to be stressed for better ways to identify risks.
Mario Trentim
CEO| PMO Global Alliance
Sao Jose Dos Campos, Sao Paulo, Brazil
Gurmeet, thanks for your comment. You're right. Brainstorming usually leaves a lot of risks unidentified. It is essential to combine more effective tools to identify risks.
Excellent effort to initiate the most critical area of risk management.
For me identifying risk is a critical and most demanding process as it has to be triggered periodically as you mentioned. Normally, organizations / pm take Risk Identification as a one time effort, which is totally against the PMI and any other project management education. If you are good in finding the risks then there are plenty of resources available, which can be used to minimize the impacts.
On other end, there is another myth around the world that risk is always a threat. In actual, being a PM you have to be equally good in finding opportunities and convert them into benefits for the project.
fosco frongia
Senior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUG
Fino Mornasco, Como, Italy
thanks for sharing this article,
on my experience I noticed that some risks are inherent to "process bugs", process mapping could be useful for determining some of these risks. I suggest SIPOC mapping. working on it you can define better the process with the related weaknesses.
other tool you can use (surely more effective than brainstorming) is the affinity diagram.
in any case I think each tool mentioned should be used if included in structured method.
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