« IT Project Management Tools: MS Project and Its Alternatives - Part 1
Organizational Change Management as a Foundation for Program Management »

Risk Management 101: Risk Likelihood

March 21, 2008 | Author: admin | Filed under: Risk Management, Risk Quantification & Analysis

Risk Management 101: Risk Likelihood (#7 in the series Risk Management 101)
By Craig Brown

An example of Likelihood ratings for project risks may be; Highly unlikely, Unlikely, May happen, Likely and Almost certain.

Depending on where you are working you can put likelihood percentages next to these classifications to increase people’s certainty about what they mean. The insurance company Benfield has published this table in presentations as an example. Your bands can be whatever you want, but they help people allocate things into classes and they help people understand what likelihood means.

Risk Table 1

As an alternative classification system I present this one from Southern Cross University’s website:

Risk Table 2

These definitions can also be enhanced by putting timeframes on them; such as within the project lifecycle, within the benefits extraction period, within a year, ten years etc. Again; it’s all in aide of effective communication.

The Insurance industry uses historical information and sophisticated models to work out how likely you are to be robbed or die of a heart attack. IT and Business projects are not yet at this stage of sophistication and I am not qualified to speak for the building industry. However, there are many reports and studies published on the internet and elsewhere that show common risks and how frequently they occur. And the number of reports increases each month.

You can also look at corporate archives to see what common risks occur where you work. For example is there a risk the deadline is too close and you don’t have time to deliver good quality? Are you the hundredth project in that circumstance where you work?

At the end of the day most people today rely upon their personal experience to assess likelihood of a risk eventuating. You should use yours too, but be aware of its limitations. When you get the chance you can search the internet, your companies documents, your colleagues memories and other places for common risk factors and their likelihood of occurring. The wisdom of many can do a great deal to help you avoid risk.

Craig Brown has worked as a project manager and business analyst mainly in the Australian ITC and the banking industries. He has also worked in the law, education and welfare industries, including starting a law firm. Craig now has a Master’s degree in project management from RMIT university, and is currently working with a Melbourne based IT consulting firm called OptimiseIT. Craig’s personal blog can be found at http://www.betterprojects.net.

Share this article:
  • StumbleUpon
  • Digg
  • del.icio.us
  • Technorati
  • Reddit
  • YahooMyWeb
  • blogmarks

Related Articles

This entry was posted on Friday, March 21st, 2008 and is filed under Risk Management, Risk Quantification & Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 person has left a comment

Please feel free to view the above/below -
I produced this for the NHS in England and Wales- its very similar to yours
regards Aly

http://www.npsa.nhs.uk/patientsafety/improvingpatientsafety/risk-assessment-guides/risk-matrix-for-risk-managers/

Aly Hulme wrote on March 25, 2008 - 6:12 am | Visit Link

feel free to leave a comment

Comment Guidelines: Basic XHTML is allowed (a href, strong, em, code). All line breaks and paragraphs are automatically generated. Off-topic or inappropriate comments will be edited or deleted. Email addresses will never be published. Keep it PG-13 people!

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>

All fields marked with " * " are required.

Project Management Categories