Risk Managment 11.2 Identify Risks

Quick Link to Risk Management

Risk Management 11.6 Monitor and Control Risks

Risk Management 11.5 Plan Risk Responses

Risk Management 11.4 Perform Quantitative Risk Analysis

Risk Management 11.3 Perform Qualitative Risk Analysis

Risk Management 11.2 Identify Risks

Risk Management 11.1 Plan Risk Management

Risk identification involves determining which risk events are likely to affect the project and documenting their characteristics.  Risk identification is not a one-time event; it is an iterative process and normally leads to qualitative analysis. New risks may emerge at any time and continued risk identification should be performed on a regular basis throughout the project. During the identification of a risk, it may also become apparent what the appropriate response should be. This information should be recorded for subsequent use in the response planning process.

Identify Risks
Inputs	Tools	Outputs
1.       Risk management plan 2.       Activity cost estimates 3.       Activity duration estimates 4.       Scope baseline 5.       Stakeholder register 6.       Cost management plan 7.       Schedule management plan 8.       Quality management plan 9.       Project documents 10.   Enterprise environmental factors 11.   Organizational process assets	1.       Documentation reviews 2.       Information gathering techniques 3.       Checklist analysis 4.       Assumptions analysis 5.       Diagramming techniques 6.       SWOT analysis 7.       Expert judgment	1.       iRsk register

Eleven Key Inputs for Identify Risks:

1.       Risk management plan: Assigns roles and responsibilities for risk identification, builds money and time into the plan to accommodate risk identification and provides information about risk identification and provides information about risk categories that may be relevant for the current project (output of previous section, 11.1).

2.       Activity cost estimates: If the estimates are expressed as a range (as recommended by PMI), activities with wider cost ranges are considered more risky.

3.       Activity duration estimates: Similarly, if the schedule estimates are expressed as a range (as recommended by PMI), activities with wider schedule ranges are considered more risky. Recall the use of PERT as one method for evaluating schedule by estimating the inherent range in possible outcomes.

4.       Scope baseline: The scope statement should include any assumptions that have been made. Assumptions are inherently risky because of the uncertainty embedded in them. This site treats assumptions as especially documented and periodically validated as to their accuracy.

Also, recall that one of the uses of the WBS is risk identification. It is usually easier to assess the potential risk of a specific work package than to identify risks for the entire project. The WBS also provides a method for tracking risks at various levels (summary, control account and work package levels).

5.       Stakeholder register: Stakeholders are a major source of risk identification information.

6.       Cost management plan: Cost management planning considers the risk register as well as reserve analysis for both cost estimating and budget development.

7.       Schedule management plan: The schedule management plan considers reserve analysis and also produces estimates with ranges so that an understanding of schedule risk is already considered.

8.       Quality management plan: Quality planning (section 8.1.3.1) may generate information about potential risks.

9.       Project documents: Risk- related project documents include:

·         Assumptions log

·         Performance reports

·         Earned value reports

·         Network diagrams

·         Baselines

·         Other information (historical information and lessons learned)

10.   Enterprise environmental factors: Published information, academic studies, benchmarking and risk tolerances are potential sources of risk information.

11.   Organizational process assets: Organizational process assets that may influence risk identification include:

·         Project files (actual historical data)

·         Organizational and process controls

·         Risk statement templates

·         Lessons learned

Seven Key Tools for Identify Risks:

1.       Documentation reviews: A structure review of all subsidiary management plans (scope, cost. Schedule, quality and so on) as well as a review of all assumptions have been made.

2.       Information gathering techniques: Examples include the following:

·         Brainstorming: Under the leadership of a facilitator, the project team or a multi-disciplinary group of experts generates ideas about project risks. The information is then refined and categorized.

·         Delphi technique: A way of reaching consensus among a group of experts who participate anonymously. The experts give responses to specific questions. The responses are then summarized and provided to the entire group. The anonymity prevents any participant from dominating the results. Several iterations are usually performed to determine whether a consensus exists among the experts. While this technique can be used for numerous reasons, the purpose here is to identify major project risks.

·         Interviewing: Conducted with experienced project managers, subject matter experts and other stakeholders.

·         Root cause analysis: Sharpens the definition of a particular risk and facilitates grouping of risks by cause or category.

3.       Checklist analysis: Organized by source of risk. Checklists use information learned from previous projects and can help make risk identification quicker and simple. A possible disadvantage is that analysis may limit their search to a pre-existing list. Examples of such sources of risk include:

·         Technology

·         Cost

·         Schedule

·         Internal

·         External

·         Procurement

·         legal

·         poor planning

·         changes in requirements

4.       Assumptions analysis: Exploring and challenging the validity of any assumptions that have been made about the project.

5.       Diagramming techniques: May include the following:

·         cause and effect diagrams

·         flowcharts (system or process)

·         influence diagrams

6.       SWOT analysis: (Strengths, Weaknesses, Opportunities, Threats) A technique to ensure risks are approached from a sufficient mix of perspectives. SWOT looks at both the upside opportunities as well as the downside concerns. The technique also considers whether the strengths, weaknesses, opportunities or threats come from internal organizational sources or external environmental sources.

7.       Expert judgment: Experts with relevant experience on similar project may be an invaluable source of information.

One Key Outputs for Identify Risks:

1.       Risk Register: The risk register is built in stages as each risk management process is performed. A plan is provided, risks are identified, risks are then analyzed, response plans are developed and on-going monitoring and control follows next. New information is developed at each step.

At this point, the risk register contains:

·         A list of potential risk events

·         A list of potential responses (if known)

For the exam, also know that a risk trigger is a symptom or warning sign that a risk is about to occur. An example might be that the cost performance index is moving out of acceptable thresholds.