A brief guide
Practical Project Risk Management
SERIES ARTICLE
By Martin Hopkinson
United Kingdom
Purpose
- Identify what matters most when prioritising project risks
- Help to improve the selection and utilisation of a variety of prioritisation techniques.
Background
Real world common practice and much of the risk prioritisation guidance provided by professional bodies is dominated by the use of the probability-impact matrix (PIM); a weak technique that produces limited insights. One of the many shortfalls of the PIM is that the technique assumes that probability and impact are the only attributes of risk that matter. This guidance sheet redresses the balance by identifying other attributes that can be relevant.
Alternative Risk Attributes
The APM guide Prioritising Project Risks (2008) identifies the following as being attributes of risks that may be at least as important/and or useful as probability and impact estimates.
- Variability (of outcome) e.g. as estimated by PDF standard deviation.
- Urgency (nearness in time by which an action or decision is required).
- Proximity (nearness in time of risk impact).
- Controllability (ability of the risk owner or owning organisation to take effective action).
- Response effectiveness (extent to which the planned risk response is likely to be effective).
- Manageability (a combined assessment of controllability and response effectiveness).
- Relatedness (degree to which causal relationships could affect the outcome of other risks).
- Ownership ambiguity (degree of clarity about the risk’s owner and owing organisation).
The list above illustrates some of the limitations of constructing a risk prioritisation scheme purely on the basis of probability and impact estimates.
Bubble Diagrams – A Technique for Displaying Multiple Risk Attributes
The two axes, bubble size and bubble colour can be used to display up to four attributes e.g.:
More…
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Editor’s note: This series of articles is by Martin Hopkinson, author of the books “The Project Risk Maturity Model” and “Net Present Value and Risk Modelling for Projects” and contributing author for Association for Project Management (APM) guides such as Directing Change and Sponsoring Change. These articles are based on a set of short risk management guides previously available on his company website, now retired. For an Introduction and context for this series, click here. Learn more about Martin Hopkinson in his author profile below.
How to cite this paper: Hopkinson, M. (2024). Risk Prioritisation – Attributes to Consider: A brief guide, Practical Project Risk Management series, PM World Journal, Vol. XIII, Issue X, October/November. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/11/pmwj146-OctNov2024-Hopkinson-Risk-Prioritisation-Factors-to-Consider-2-1.pdf
About the Author
Martin Hopkinson
United Kingdom
Martin Hopkinson, recently retired as the Director of Risk Management Capability Limited in the UK, and has 30 years’ experience as a project manager and project risk management consultant. His experience has been gained across a wide variety of industries and engineering disciplines and includes multibillion-pound projects and programmes. He was the lead author on Tools and Techniques for the Association for Project Management’s (APM) guide to risk management (The PRAM Guide) and led the group that produced the APM guide Prioritising Project Risks.
Martin’s first book, The Project Risk Maturity Model, concerns the risk management process. His contributions to Association for Project Management (APM) guides such as Directing Change and Sponsoring Change reflect his belief in the importance of project governance and business case development.
In his second book Net Present Value and Risk Modelling for Projects he brought these subjects together by showing how NPV and risk modelling techniques can be used to optimise projects and support project approval decisions. (To learn more about the book, click here.)
To view other works by Martin Hopkinson, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/martin-hopkinson/
