In a previous meeting, everyone wrote down all expected risks. Now a determination needs to be made concerning the priority of those risks. This involves a two-stage evaluation process.
In the first phase, the likelihood of a risk is determined and rated it from 1 to 9, 1 symbolizing the least likely and 9 the most likely. In the second stage, the team determines the impact / outcome of an event upon the project, or the expected losses due to this event occurring. This is then prioritized as follows:
• High: It has a greater significant impact on the time schedule or the cost of the project.
• Medium: It has a medium impact on the time schedule and cost.
• Low: It has a lower influence on the time schedule and little impact on the cost.
In summary, the following table can be used to determine the risk priorities.
The team must know what is the probability that the event will occur and what its impact to the project. The impact will be obtained through the discussion for each event by answering the two questions: what is the probability of potential risks, and what is their impact on the project The category of the risk can be obtained directly from the matrix just illustrated in Table (9.2).
• Any event posing an unacceptable risk needs to be analyzed thoroughly and with great precision. These are the risks that threaten the project as a whole, so the focus must be on measures that would reduce or remove the risk or its impact before it could happen.
Table 9.2 Risk ranking score
• A high-risk situation is distinguished from an unacceptable-risk situation by the fact that it would be costly but not necessarily fatal for the project as a whole. Management of high-risk situation requires sustained monitoring.
• The potential damage of a medium-risk event, associated with an impact on some but not all key points of the project, may be mitigated by ongoing review at each meeting of the project of actions taken to manage this risk and of any follow-up.
• The low-risk event is one that is not expected to have significant impact on the project but on a watching brief is consciously maintained. Also to be paid careful attention are changes in the actual unfolding and implementation of the work plan of the project and their potential to increase or lower the risks identified on the matrix, and or their priority within it.
After all the risks have been identified individually, they are ranked from lowest-risk to unacceptable, Solutions are proposed and responsibility assigned in each case, and the complete panorama is registered according to the schema outlined in Table (9.3).
Table 9.3 Risk management
Table 9.3 (cont.) Risk management