Original subtitles

Welcome to Part B of Session 2 in our course on Project Risk Management.

In this part, we will focus on identifying different types of risks

affect project outcomes.

Now that we have seen how risks can lead to project failure, let's take the next

step and break risks down into different types.

Not all risks are created equally.

Some are technical, some are financial, and others are related to people or

processes. In this section, we'll look at how identifying risk categories helps

you manage them more systematically.

One way to make sure we are not missing important risks is by using a standard

list of risk categories.

This approach helps us think more systematically and avoid blind spots

risk identification.

That's why most companies, and especially PMOs, are encouraged to

standard list of risk categories.

It serves as a reference during planning and makes the process more consistent

across projects. Of course, there is no one -size -fits -all list.

The specific categories the company uses should be tailored to its industry,

project type, and organizational structure.

From a business perspective, risks can be categorized in different ways.

One basic category is business risk, which includes the possibility of either

gain or a loss.

In contrast, pure or insurable risks only involve the chance of loss with no

opportunity for gain.

These include property risks such as fire, hail, or earthquakes.

Financial risks like theft or credit issues also fall under this group.

Other examples are people risks like personal injury or liability risks

to products executed or legal mistakes.

can also be classified based on when they occur during the project lifecycle.

Initiation phase risks show up at the very beginning and may stop the project

from getting approved.

For example, the customer might reject the proposal or disagree with the

pricing.

Planning phase risks affect the preparation work before the actual

begins. A common issue here is not finding a qualified vendor or facing a

supplier shortage.

During execution risks often involve problems like late delivery or missing

in the work plan.

These can delay progress or impact quality.

And finally, closure phase risks appear at the end and can affect the final

results. For instance, the deliverable might not work as expected or fail to

meet the client's needs.

This example highlights the value of learning from past project experiences.

PERIL stands for Project Experience Risk Information Library.

It is a database that tracks real project risks and their impacts.

The risks are grouped into categories like scope, schedule, and resource.

As shown in the table, scope -related risks occurred more often and had the

highest average impact in terms of weeks lost.

Resource and schedule risks also cause significant delays.

So what does this tell us?

When we plan for risk management, it makes sense to look at the patterns like

this and learn from others' experience to help us anticipate which areas are

more likely to cause trouble and prepare for them in advance.

When we plan for risks, one of the most useful tools we can rely on is the Risk

Breakdown Structure or RBS.

It works a lot like a WBS, but instead of organizing tasks, it organizes risks

in a clear and structured way.

On the left side, you can see a simplified version from Kloppenberg's

It groups RIF into four main categories, including technical, external,

organizational, and project management.

Each of these categories breaks down further into specific sources like

requirement, technology, complexity, and quality under the technical group.

The table on the right comes from the PMBOK guide and takes it a step further

listing detailed subcategories for each risk area.

This helps project teams identify risks more systematically instead of depending

only on the past experience or open discussions.

As you can see, using an RBS gives us a strong starting point for better risk

analysis and helps make sure we don't overlook important traits.

When we analyze risks, there are 40 characteristics that helps us understand

serious each one might be.

The first is probability, which tells us how likely it is that the risk will

actually happen.

Some risks are very likely, while others are just remote possibilities.

The second is impact, or the effect that that risk could have on the project if

it does occur.

Even if a risk is not very likely, it can still be important if the impact is

high. The third factor is expected timing, which means when during the

the risk might show up.

Some risks appear early, like during procurement, and the others show up

such as in final testing.

The last characteristic is frequency, which refers to how often the risk might

happen. It could be a one -time event or something that repeats multiple times

during the project.

These four factors helps us prioritize risk and choose the right way to respond

them.

And that brings us to the end of Part B.

Thank you again for following along.

When you're ready, go ahead and watch Part C to continue.