Project Risk Categories

Projects risks are uncertain events or conditions, and if they occur, will bring some impacts on the project objectives. A risk condition can impact the project’s scope, time, cost or quality objectives. Risk Management includes identifying all such conditions comprehensively and managing them proactively. Risk identification, thus, is the most important step in risk management. How sincerely we identify all the possible risk conditions, will decide how well we manage project risks.

Risk identification has to be done very comprehensively. All possible risk conditions that can occur in a project must be identified without fail. Risk identification is done by the entire team and important stakeholders in a collective manner. This is a team effort. Risk identification process must be carried out in a systematic manner ensuring that all risks are identified. The team identifies the risk conditions using their previous experience.

Risk categories are a list of already known categories of risks, which if provided to the risk identification team, will greatly facilitate them in systematic risk identification for each category.

Typically the risk categories can be made as a list or even as “risk breakdown structure”. We can also prepare various “Prompt Lists” involving various categories which can be used readily for risk identification.

The team uses both the Work Breakdown Structure and Risk Breakdown Structure together for comprehensive risk identification.

Risk Categories

Some of the broad risk categories can be seen as below:

• External
  • Regulatory
  • Weather
  • Suppliers
  • Market Place
  • Customer
  • External Stakeholder Groups
  • Political
  • Environmental
• Internal
  • Work culture
  • Processes & Systems within the organization
  • Resources
  • Prioritization
  • Project Dependencies
  • Funding
  • Technology
  • New technology
  • Requirements
  • Interfaces between systems
  • Performance and reliability
  • Quality
• Project Management
  • Planning
  • Executing
  • Estimating
  • Communication

The above list of categories are already known list of categories which can be used effectively for risk identification process. The above is a sample “risk breakdown structure”. One can add more categories as will be appropriate.

We can also create readily usable “prompt lists”. Some example of prompt list can include the following:

• PESTLE: Political, Economic, Social, Technological, Legal, Environmental
• TECOP: Technical, Environmental, Commercial, Operational, Political
• VUCA: Volatility, Uncertainty, Complexity, Ambiguity

Conclusion

Risk categories are very useful information which makes the risk identification process quite effective and robust. The known list of categories provides the team the needed prompt to think in a structured and systematic way during risk identification process. It ensures that risk identification has been done comprehensively covering all possible aspects of risk conditions. Such risk categories can be listed as readily available information for the project team to be used for each project. Such lists can be maintained by the project management office as part of the standard project information. Take PMP certification training course on KnowledgeHut.