Project managers can use several tools to identify project risks, including interviews, brainstorming, checklists, assumption analysis, cause-and-effect diagrams, the nominal group technique, and affinity diagrams. One of my favorite techniques is the SWOT analysis, where you and your team can identify and prioritize strengths, weaknesses, opportunities, and threats.
Once you’ve completed the SWOT analysis, you will have identified opportunities (positive risks) and threats (negative risks), inputs for your risk register. The information can help you develop strategies to achieve your project objectives.
When to Use the SWOT Analysis
I have used the SWOT analysis in many projects. Here are some examples:
- Evaluate business processes
- Evaluate technology interfaces
- Evaluate existing software
- Evaluate proposed solutions
- Evaluate customer service centers
Some people refer to the SWOT analysis as the inside-out analysis. The focus of the strengths and weaknesses is internal. What are the strengths and weaknesses of your organization or something within your organization?
The focus of the opportunities and threats is external. For example, what opportunities exist with external vendors, technology, or markets? Likewise, consider the threats outside of your organization that may hinder your ability to achieve your project objectives.
Understanding the SWOT Terms
- Strengths (Internal Focus): something that an entity is good at doing or that gives the entity an important capability. A strength may be a skill, expertise, a valuable resource, a competitive capability, or an attribute that provides market advantage.
- Weaknesses (Internal Focus): something an entity lacks or does poorly or a condition that puts it at a disadvantage.
- Opportunities (External Focus): a combination of circumstances favorable to a good chance (e.g., discount on a limited-time volume purchase).
- Threats (External Focus): anything that may hinder or limit your ability to achieve your objectives.
How to Perform the SWOT Analysis
Here are the steps for performing a SWOT. Be sure to include appropriate stakeholders in your analysis:
- Brainstorm and capture strengths.
- Analyze and combine appropriate strengths.
- Prioritize strengths in a forced rank order. The nominal group method is another way to prioritize your SWOT.
- Follow these steps 1-3 for weaknesses, opportunities, and threats.
- Define strategies. Here are some examples:
- Define strategies that use strengths to take advantage of opportunities.
- Define strategies that use strengths to avoid threats.
- Define strategies that take advantage of opportunities by overcoming weaknesses.
- Define strategies that minimize weaknesses and avoid threats.
Updating Your Risk Register
Once you have completed your SWOT analysis, update your project risk register with the risk-related information. Be sure to include the risk responses/strategies for your most significant risks. Lastly, identify risk owners who have expertise to monitor the risks and execute the response plans when necessary.
For more brilliant insights, check out Harry’s blog: The Project Risk Coach