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What is Risk Identification?

The first step in risk management is identifying the risks that we will see in our project. These are the things that threaten to stop us from delivering what we have promised on the schedule we promised for the budget we promised. If we were completely certain about everything in the project and how it was going to turn out, we would not have to worry about risk management. From this lack of knowledge of how the project is going to unfold come the problems that we will have to deal with. These are the risks we want to identify. Every practical means must be used to discover the risks that are associated with the project. Meetings must be held throughout the project to discover new risks that have appeared and to dismiss risks that can no longer take place.

All of the assumptions that have been made to date on the project are potential risks as well and should be listed among the other risks identified.

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The first thing we must do in risk identification is recognize the areas of the project where the risks can occur. This means that we will have to investigate the following areas:

Scope. We must look at the work of the project. The work breakdown structure (WBS) will be useful here. The project scope must be clearly defined in terms of both the deliverables and the work that must be done to deliver them. Errors and omissions on the part of the project team and the stakeholders must be minimized. As always, the WBS will be very helpful in doing this.

Time. Estimates for the duration of the project and the duration of the project tasks must be done accurately and reliably. The sequence of work must be identified, and the interrelationships between the tasks must be clearly defined.

Cost. Estimates for tasks must be done accurately and reliably. All associated costs must be considered and reported accurately. Life cycle costs should be considered as well as maintenance, warranty, inflation, and any other costs.

Customer Expectations. Estimates of project success must be considered in terms of customer needs and desires. The ability of the project to be scaled up or manufactured in different quantities or for different uses and sizes must also be considered.

Resources. This involves the quantity, quality, and availability of the resources that will be needed for the project. Skills must be defined in the roles that will be necessary for the project.

Organization. This is the ability to interface with the stakeholder’s organization in terms of communications and knowledge.

Many people both inside and outside the project will be necessary for risk identification. This includes input not only from the project team and all of the stakeholders but also from project managers who have managed this type of project before and even consultants who have special expertise about certain kinds of risks. It may be necessary to organize the types of risks into categories so that separate teams of people can be brought together more efficiently.

Many of the risks that will affect the project are risks that have happened in one form or another on other projects of this type. Utilizing the information available in the previous project’s lessons-learned documents will be very helpful in identifying risks for this project. An organized review of past projects should be done as part of the risk identification process.

Since much of the risk identification process will involve large numbers of people, formal group dynamics techniques should be used.

Brainstorming Technique. Most people are familiar with this process, and many have had disappointing results. In brainstorming a facilitator briefs the meeting attendees and asks the participants of the meeting to name risks that they think could occur in the project. The facilitator encourages the participants to name any risk they can think of, even ones that seem silly, and makes a list of the risks on a board or flip chart. What happens in brainstorming is that the ideas of one person generate new ideas from another person, and a kind of chain reaction takes place, producing the identification of many ideas about risk.

There are some problems with brainstorming that will affect the success you have with the technique. The main problem is that unless you have an excellent facilitator, there will be minimum participation from the attendees and few risks will be identified. This problem is even worse when there is a large difference in the status of the individuals attending. A person who is the supervisor of some of the participants may intimidate them or dominate the meeting.

Delphi Technique. This technique of group dynamics eliminates the problem of dominance, shyness, or intimidation that sometimes occurs in brainstorming meetings. In the Delphi technique the participants are anonymous to each other. This technique can be conducted with Internet messaging or even by e-mail and has the advantage that people can participate from many different locations.

In this technique the facilitator asks for input from the participants. He takes their ideas and consolidates them into a list that is sent to each participant. The participants then add ideas to those already listed. This circulation of the lists continues until no additional ideas are generated.

The Delphi technique creates a lot of work for the facilitator. All ideas have to be listed by the facilitator, who also usually has to telephone many of the participants in order to get them to participate in each round. The overall time to do the Delphi technique can be weeks depending on how dedicated the participants are.

Nominal Group Technique. This is another type of meeting technique. In nominal group the participants are known to one another as in brainstorming, but the ideas are submitted to the facilitator as written lists. This makes the ideas, if not the participants, anonymous. The facilitator lists the ideas on a flip chart or a board, and the participants add more ideas in another round of written lists until no additional ideas are added.

This technique reduces any status concerns or intimidation that might be present in a brainstorming session but does not eliminate it entirely. There is more work for the facilitator, but the nominal group method can be done in a single meeting, and participation improves over brainstorming even if some enthusiasm may be lost.

Expert Interviews. There might be experts available either inside or outside the company for a new project and a new kind of business. Expert interviews must be handled with care. If the project team is not prepared for the expert interview, much time can be wasted with the expert simply telling stories about his or her past exploits. An effort should be made to develop a list of questions for the expert.

Ishikawa or Fishbone Diagrams. Fishbone diagrams or cause-andeffect diagrams, also called Ishikawa diagrams after their founder, Kaoru Ishikawa, a Japanese quality engineer, are useful in identifying risks.

The diagram, shown in CAUSE-AND-EFFECT DIAGRAMS, is a useful way of organizing and analyzing a process into its subprocesses. The subprocesses can be further broken down into other subprocesses until a level of detail is reached where a small group can look into the subprocess in detail and the risks associated with each can be easily identified. Further use of the diagram will lead to the identification of the causes of the risks as well.

Once the risks have been identified, the same techniques can be used to identify the triggers for the risks. Triggers are the symptoms that indicate that the risk is about to occur.