Most people regularly assess risks and stop short in their assessment. For years we have been told to pay close attention to the main two dimensions of risks: probability and impact. What if we are stopping short on our assessment by limiting ourselves to only these two? In this article, we will look at other dimensions to consider. Let us try to come up with a clearer version of our crystal ball so as to better predict the risks to our projects.
As individuals and organizations start using techniques and working in more intricate ways with processes and frameworks, it becomes clear that there is often some more work that could be done to improve our outcomes or the confidence in the data generated. In recent years what used to be simple risk management analysis has become a domain for improvement and additions to come up with clearer and more accurate predictions.
Most risk registers and risk management plans out there focus on defining probability and impact via the use of scales and matrices. This is a lean and mean way of graphically conveying the level of risks for a project. If you work in this area, you often see some flaws with this identification and analysis process. It is hard to get out of this equation any biases and to clearly predict how the data will be influenced by the stakeholders’ tolerance and appetite levels. I often discuss in my risk classroom the fact that a stakeholder walking into a room will not say: “Hello, my name is John and I am risk-averse,” and you won’t be able to read that information off of their forehead.
Risk managers all over the world have recognized this issue and are always trying to find ways to pinpoint how to get clearer or more targeted information out of the process. This has led to the definition of several new dimensions of risks being introduced with additional calculations or formulas generated. What used to be an easy formula (Probability x Impact or P x I) has now become a whole pile of layers of formulas to accelerate, diminish, or target the final score.
If these modified dimensions are utilized on a specific project, you should find a description or definition of their use in the risk management plan while most of them are then added to the risk register as an additional column of information which may or may not impact your final score or rank calculation.
Sylvie Edwards, PMP, MCPM, STDC, CMP, FPMAC has 25 years of project management experience spanning various industries and is the owner of SRE Solutions, catering to clients in need of project management course development, education, project risk management, PMO setup/evaluation or recovery services. She has worked with one of the top five consulting firm, where she led projects in the information technology, banking, government, and securities sectors as well as being a manager in the risk management practice. Sylvie writes about risk management, communication, and PMO.