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Risk Categories and Identifying Risks During your Project
What are risk categories? They’re described in the risk management plan, and they provide a means for grouping individual project risks for the project team to try and consider the full range of sources from which project risks might come about, or may arise.
It’s just a way of breaking down those risks and starting from a large source of risk, where maybe there’s a few different risks within that large source and in that way we’re finding the categories of risk that we can actually look to and reuse over time in other projects as well.
This also comes down to the organizational process assets, or the OPAs of the organization that you’re working in. Perhaps they already have a list available, but risk categories might be used differently depending on the organizational process assets in a company. One of the ways is a risk breakdown structure. In the same way that we’re talking about that we might have a large source and then delving deeper into that source of risk and finding the categories, a company might have just a simple list of categories based on project objectives that you can pick and choose from to give you or to prompt you, so that you understand or you can see in advance things that might come about.
Here’s an example of a risk breakdown structure or an RBS, as you can see there’s the high level view and then all of the smaller levels as we delve deeper into those risks, and that’s usually done by brainstorming, finding the large functions here and then getting together with expert users in particular areas and seeing what they think. They’ll usually have a good idea of the risks that might come about. There are other ways to find common categories of risks, and some of those are using frameworks – strategic frameworks that are more suitable for identifying sources of overall project risk.
Example Risk Frameworks
Some of those you might be familiar with: We’ve got PESTEL, which is Political, Economic, Social, Technological, Environmental and Legal. That’s just a framework that we can use or a lens that we can use to view the project risks through. So what might come about from political changes, what might come about from economic changes for example.
Next is TECOP, which is technical, environmental, commercial, operational and political – very similar to PESTEL.
Lastly VUCA, and you might have seen this one used in the Defense Forces or in government quite often, where we’re looking at Volatility, Uncertainty, Complexity (so what are the areas of complexity that might throw us off course), and Ambiguity – what is ambiguous about the project that we aren’t quite sure about? And that’s just another lens that we can view the project through, to try and identify those sources of risk.
And those are risk the categories and the RBS.
– David McLachlan