So you’ve compiled a list of possible project risks. It’s long and thorough, but it’s a bit too long on its own. Categorizing these risks would be the best plan of attack to get them under control, but how would you go about categorizing them? Have no fear. In a post for Project Management Tips, Elizabeth Harrin has you covered with three different ways to manage your list:
- Categorize by nature
- Categorize by level
- Categorize by identification
When categorizing a list by its nature, it’s important to separate items into pure risks and business risks. The difference between these two is that a pure risk has no gains and that a business risk has a possibility of a gain in the outcome. Business risks are most closely related to the day-to-day activities of business, with an example being the stock market.
When categorizing risk by identification, they can fall under “known unknowns” and “unknown unknowns.” While their name sounds like the setup to a joke, their functionality is intrinsic to their names. A “known unknown” is essentially a risk that you have identified that may or may not happen and should be worked with alongside your regular plan of attack for dealing with said risks. An “unknown unknown” is when a risk may occur that hasn’t been identified. An “unknown unknown” can still be accounted for by putting contingency plans in place, such as putting money aside to deal with the “unknown unknown” when the time arises.
The final option is to categorize by level, which Harrin breaks down into this information:
Workstream risk: This risk affects one workstream within a project, for example the strand of technical work. No other workstreams on the project would be affected if the risk materialized.
Project risk: This risk affects the project overall.
Overall risk: This is the outcome when you aggregate risks and view several (or all of them) grouped together. This is useful when you want to know what the big picture risk problems could be. For example, you might have four or five workstream risks related to the Sales area. When you aggregate them and look at what would happen if they all materialized, you’d probably want to take a more strategic approach to addressing them.
You can view the original post here: http://pmtips.net/blog-new/how-to-make-sense-of-your-project-risks