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Identifying Risks

Risk identification is the first step in risk management and involves documenting potential risks that could prevent an organization from achieving its objectives. There are several ways to identify risks for a project, including documentation review, brainstorming, interviews, SWOT analysis, root cause analysis, employee feedback, assumption analysis, using a risk register, Monte Carlo analysis, and decision trees. These methods help understand vulnerabilities and plan accordingly to address potential risks.

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111 views13 pages

Identifying Risks

Risk identification is the first step in risk management and involves documenting potential risks that could prevent an organization from achieving its objectives. There are several ways to identify risks for a project, including documentation review, brainstorming, interviews, SWOT analysis, root cause analysis, employee feedback, assumption analysis, using a risk register, Monte Carlo analysis, and decision trees. These methods help understand vulnerabilities and plan accordingly to address potential risks.

Uploaded by

habibrao253
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Identifying Risks

What is risk identification?


• Risk identification is the process of documenting any risks that could
keep an organization or program from reaching its objective. It's the
first step in the risk management process, which is designed to help
companies understand and plan for potential risks.
Ways to identify risks for a project
• Documentation review
The list of documents that can be involved in that review include:
• Project schedule
• Project charter
• Procurement plan
• Project scope statement
• Cost estimates
• Work Breakdown Structure (WBS)
Brainstorming
• Brainstorming comprises gathering a group of people to talk about
the project. You provide the topic of the discussion, and everybody
can share their perspective. Discussing the potential challenge s with
other company employees, executives or managers can help you
identify risks.
Interviewing
• You can interview stakeholders, project participants or experts to
identify risks. In contrast with the brainstorming, you direct questions
about the project and usually conduct interviews one-on-one. There
are two types of interviews:

• Structured interview: You ask a specific list of questions you prepared


in advance.
• Unstructured interview: You discuss the topic without a pre-defined
list of questions.
SWOT analysis
• A SWOT analysis analyzes a project's strengths, weaknesses,
opportunities and threats. By understanding where the project might
be vulnerable, you can discover potential risks and plan accordingly.
For example, if you realize that your company's main supplier is
located in an area where hurricanes are common, you can try to avoid
placing large orders during hurricane season or contact a backup
supplier in a different area.
Root cause analysis
• Root cause analysis is a systematic method you can use to determine
a problem's primary cause and develop a way to address it. Here are
the main steps to perform root cause analysis:
• Specify the problem.
• Collect data.
• Determine the causal factors, meaning those that led to the issue.
• Define which factors are root causes and which are simply symptoms.
• Identify actions to correct the problem.
• Find solutions that can stop the problem from happening again.
• Execute the solution.
Employee feedback
• The employees' perspective of an organization can help identify risks
because it's often different from that of upper-level management. For
example, there might be a risk of injury because of insufficient
training on a machine. The employees using the machine may notice
the need for additional training before their supervisors.
Assumption analysis
• You can identify several assumptions of the project or program. Then,
you determine if they are valid, meaning if you can prove them to be
true. You may have guessed a few times while making decisions for
your project. Perhaps you assumed that your supplier has the
inventory you need in stock or that your warehouse has enough space
to store your new shipment. These guesses are called assumptions.
Inaccurate or inconsistent assumptions can present risks for the
project.
• Record and track the assumptions throughout the project's lifecycle in
a document known as the assumption log.
Risk register
• A risk register is a document that you can regularly update
throughout the project's life cycle. It includes:
• Risks
• Root causes of risks
• Potential responses
• Updated risk categories
Monte Carlo analysis
• This is a mathematical modeling technique that helps determine a
potential risk's probability and impact. The objective of the Monte
Carlo analysis is to observe what would happen if the project didn't go
as planned time and schedule-wise using a computer to run countless
simulations.
Decision tree
• A decision tree is a diagram that you can use to clarify and solve a
problem. It considers several future possible events and analyzes
them at one point in time, helping you to explore the different
alternatives one decision can lead to. Each branch on the decision
tree represents a possible decision or event while the leaves depict
possible outcomes. The decision tree allows you to visualize the
relationship between various events and consider possible
advantages and disadvantages before making a decision.
• https://www.indeed.com/career-advice/career-development/risk-ide
ntification

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