Risk velocity refers to the time to impact. Some risks happen instantaneously, others slowly, over a few months to a year or even more. Either way, all types of risks are worthwhile to acknowledge. When assessing risks, we take into account the probability that it will happen and the amount of impact that it will have on the project. Adding in velocity (how soon it is likely to happen) to the mix will help us gain a greater perspective of analyzing risks.
A low risk velocity will mean that there will be more time to react to the risks, come up with a contingency and fallback plan. A high risk velocity means that the risk impacts immediately, without any warning.
The author of the pmsouth.com article, Harry Hall, describes how to rate risk. On a scale from 1 to 5 ( 1 being low and 5 being high), rate the probably and impact of a risk. As an example, Hall rates the probability of a risk as a 4 and its impact as a 5, multiply those together to get a risk score of 20. Now add in velocity to the mix and use the following formula to calculate the risk score.
(Probability + Velocity) x Impact = Risk Score
Referring back to Hall’s example, now we have a velocity rating of 4, which means that we don’t have much time to react to it as it may occur in a matter of days to a few weeks. That brings the risk score to be:
Risk 1: (4+4) x 5 =40
Compare that risk score to a risk that has a probability of 4, impact of 5, and velocity of 1.
Risk 2: (4+1) x 5 = 25
The second risk has a high chance of happening and a very high chance of impact, but will also occur much later. The first risk has a high chance of happening and also a very high change of impact, similar to Risk 2. However, it will happen very quickly, total opposite of risk 2 nd that is where the difference of velocity separates the two.
Read the full article here: http://www.pmsouth.com/2014/04/25/how-to-evaluate-risk-velocity/