The risk analysis covers the project’s risks, assesses the severity of the individual risks and prioritizes the risks in question. Finally, the analysis provides solutions to prevent or mitigate these risks. These proposals can be incorporated into the project plan. The tool consists of a number of templates that are easy to use and copy into your report or project description. The templates are in Power Point or Word.
Purpose and yield
The risk analysis describes the risks that the project team can identify and considers how serious the individual risks are. The risk analysis prioritizes the risks involved and defines solutions to prevent or mitigate these risks. The risk analysis should be prepared as early as possible in the project and must be updated on an ongoing basis. As a project manager you need to follow-up on the identified risks throughout the project.
The risk analysis is often conducted on two levels, but the method is the same
- On an overall level, the analysis is done before the project is designed to set requirements for the project’s design. That is, requirements for organization, professional skills, collaborators, approaches, plans, technology, funding, project strategy, etc.
- When the project is designed and planned, the risk analysis must be carried out on the basis of the chosen design. Another design and another plan will provide another risk profile. It is important that the risk analysis used in the project is based on the current design and the current plan.
Who should attend?
- If the overall risk analysis is carried out to ensure robust project design, project owners and steering committee members should participate. It is also relevant to involve key specialists and stakeholders. It is important to involve all the relevant knowledge and people who have to live with the possible risks.
- When the project is designed and planned, the risk analysis is carried out by the project team. It is advisable to involve project owner and relevant specialists who are not regular members of the team. Project owner and steering committee members might not participate in this work but should at least accept the risk analysis, its consequences and resources for preventive and mitigating actions.
How to do
Gather the relevant participants and conduct a workshop with the following activities:
- Conduct a brainstorm on the topic: “What can go wrong in the project?” Remember the brainstorming rules. You can use the inspiration list 1.
- Describe all ideas for risks on cardboard or post-it notes.
- Sort cards or post-it notes based on the two criteria: “The probability that it will happen” and “The consequence if it happens” (Template 1). The probability scale goes from 1 to 5, where 5 is most likely. Note that 5 does not mean 100% because then we are not talking about risks, but about something that will happen. Impact scale: 1 = Less disturbance in the project, 5 = The project does not deliver the desired or must be stopped. The scales are relative scales between the proposed risks. Instead of the visual prioritization of risks, a calculation of the individual risk can also be made. Risk = Probability x Consequence (Template 2).
- Describe preventive and mitigating measures. At low probability, preventive measures may be all too resource-intensive. With major consequences, mitigating measures are important. When both probability and consequence is high, both preventive and mitigating measures are relevant. Consider several alternative actions in collaboration with the relevant participants (Template 3).
- Evaluate the different actions and describe their ability to reduce the probability or consequence. Consider what each effort requires of resources in money and time (Template 4).
- Select the most effective actions and add them to the project plan. Define which milestones (Risk Stones) that closes the risk, for example a test, a review or something else. Describe when this risk is closed and who is responsible (Template 5).
See the detailed description of the procedure in the PowerPoint tool: Risk analysis. The Word tool contains only the templates. The risk analysis is a general project management tool that can be used regardless of whether you work with projects that are based on IPMA, Prince2, PMI, agile methods such as Scrum or Half Double.