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Risk analysis identifies the probability and impact of obstacles in a project. For every project, use qualitative risk analysis to uncover individual risks. You can follow up with quantitative risk analysis which provides the overall risk of a project. But that’s only necessary for big projects with big expenses.
To assess the risks and know where to look for risks in a project, you’ll need a risk analysis template.
Why Do Risk Assessments?
The point of risk analysis is to reduce the impact of risks and/or create an actionable plan if those risks become reality.
Risks need to be managed. Otherwise, the project will be vulnerable to disasters.
So, by doing risk assessment through analysis, the likelihood of project success increases.
Now Onto the Risk Analysis Template Making
How do you go about creating a risk analysis template?
Bases must be covered if you want your qualitative risk analysis to be accurate. Your risk analysis template needs to include:
- Project Management
- External Factors
With the above list, the only first-hand influence your team will have is with Project Management. The risks in this category can be altered and changed as necessary.
But with external factors, if the risks show high probability or impact, your team can only respond to these risks. It will require a plan of action to limit the impact.
Here are factors to include and assess in your risk analysis template.
1. Project Management
Project management issues reflect how incorrectly a project is handled. It’ll be difficult for the project to be a success if the issues start at management.
Risks to consider:
- Too many projects happening simultaneously
- Not enough people involved in the project
- Too many people in charge of the project
- Unrealistic planning and/or control
- Poor control of design changes
- Over-committed organization
- Poor project organization
- Priority conflicts
You can check the above and number risks from 1 to 5 (5 being extreme).
For example, you may have an appropriate amount of people in control of the project. So the risk of this hurting the project is 1. But if no one is in control of design changes that could be a 2-5 in terms of risk and impact on the project.
You can use numeric values, as well as color coordination to assess risk impact.
2. External factors
These factors aren’t easily influenced. Because you’re not in control of them, as you are with project management.
Risks from external factors may influence your project. You will need to plan how to account for these risks if they are a high priority.
We can also break down external factors as unpredictable and predictable.
These factors can happen with little or no warning.
- Unpredictable regularly requirements
- Sabotage or side effects
- Natural disasters
Is the base of operations located in tornado country? Are there people who can sabotage the success of the project? How will this impact the project?
These are things to consider when completing your risk analysis template.
Predictable external factors can be assessed through research and data.
- Social changes
- Environmental changes
- Technological changes
- Tax (increases)
Go into detail. What happens if taxes increase — will this eat a hole in funding plans? Or if the temperatures are too low for too long — how will this impact your project, if at all?
Record the impact probability for each section.
Technological & Legal
Technological risks are changes in technology and production influences. Legal risks can branch into complicated factors. You need to plan for risk changes, impact, and probability.
- License and trademark violations
- Legislations and bills
- Breach of contracts
- Workplace issues
- Labor disputes
You want to breakdown each category. For example, what government bills can risk the success of the project? Are there current labor or workplace disputes recorded at this time? What about the probability of contracts breach by teammates?
Identify the risk. Record the probability and impact.
To sum up…
Risk assessment will take a varying amount of time to complete. But with each risk assessed, understood, and mitigated, the chances of project cancellation or disruption will be reduced. How great the reduction depends on the risk impacts and the plan of action.
Use qualitative risk analysis for small projects. And follow up with quantitative risk analysis for bigger (in expenses, funding, and time) projects. With the results from the analysis, put everything together with a detailed risk analysis template.