Guidelines for Risk Analysis

Risk Source

Risk sources are the fundamental drivers that cause risks within a project or organization. There are many sources of risks, both internal and external, to a project. Risk sources identify common areas where risks may originate. Typical internal and external risk sources include the following:

·         Uncertain requirements

·         Unprecedented efforts—estimates unavailable

·         Infeasible design

·         Unavailable technology

·         Unrealistic schedule estimates or allocation

·         Inadequate staffing and skills

·         Cost or funding issues

·         Uncertain or inadequate subcontractor capability

·         Uncertain or inadequate vendor capability

·         Inadequate communication with actual or potential customers or with their representatives

·         Disruptions to continuity of operations

Risk Parameters
On identifying the possible project risks, PM has to define risk parameters like Probability, Severity, Threat, Threshold etc. Also PM define the category of the risk depending on the risk source.

 

• Probability
Probability is the possibility of risk occurrence. It is in between 1 to 10 values. PM can specify the proper probability value for a particular risk.
• Severity
Severity is the seriousness of risk. It is in between 1 to 10 values. PM can specify the proper severity value for a particular risk.
• Threat
Threat is defined as Probability multiplied by Severity. This is overall possible value of risk to occur.

 

Risk Categories

• Customer Related
Risks such as customer unavailability, customer dependency can be included in this category.
• Environment Elements
This category includes risks like:

• Weather
• Natural disasters

• Interface
Risks related with software/hardware interfaces of the project, product integration approach etc can be included in this category.
• Knowledge
This category includes risks such as unskilled staff in particular domain, lack of training.
• Requirements
This category includes risks like:

• Frequent change in Requirements
• Unclear understanding of Requirements

• Resource

This category includes resource (software, hardware, human) related risks.

• Schedule

Risks such as schedule slippage beyond the objective, inadequate schedule etc can be included.
• System
This category includes risks like:

• Hardware unavailability
• Network failure
• Server failure

• Technical

Project related technical (product or product component related) risks can be included here.

• Technology

Technology related risks like new technology introduced, its limitations, its impact can be considered.

• Third Party Tool/Service
Risks related with the third party tools need to be purchased, outside service or subcontracting needed, can be included.