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RISK IDENTIFICATION AND ASSESSMENT
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The rst step in risk planning is risk assessment, which is a matter of turning uncertainty into risk. Uncertainty is unde ned, but risk is de ned. We turn uncertainty into risk by naming each risk item, and assigning a likelihood and a consequence to each item. For example, if I say, Let s have a picnic on Saturday, and you say, Something could ruin the day, that is uncertainty. I begin risk identi cation by saying, What could go wrong If you say, It might rain we have identi ed a risk. However, to assess it, we have to go further. If we consult a weather forecast and nd out there will be a 60% chance of rain on Saturday, and we agree that if it rains there will be no picnic, then we have de ned and assessed rain as a risk for our picnic. There is an important di erence between probability and likelihood. Probability is measured in percent, with 0% meaning it cannot happen, and 100% meaning it is certain to happen. However, we can only truly create a probability if we have a scienti c theory and a large body of data for comparison, the way weather forecasters do. In project risk management, we usually do not have that kind of theory or that much data. So, we replace risk with likelihood. In doing so, we work with qualitative risk analysis, using identi cation and ranking, rather than quantitative risk analysis, which applies statistical tools.
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CHAPTER 11 Managing Risk and Change
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Risk identi cation: From uncertainty to a list of risks
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The rst step is to produce a list of risks. We sit down with our team, put the plan in front of ourselves, and say, This is a great plan. What could go wrong And we make a list of items. We can also use our team s experience of problems on past projects and written documents, such as lessons learned from past projects.
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Proactive Pessimism
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We want to look at what might go wrong, but we do not want to fall into doom and gloom. I suggest we take an attitude of proactive pessimism: What could go wrong, and what are we going to do about it We can make this a fun brainstorming session with our team, and then expand the risk planning process to include key stakeholders and others.
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The simplest approach is to look at each plan, particularly the project overview and the work breakdown structure (WBS), in detail, and ask about each item: What could go wrong Here are some guidelines for a team meeting to identify risks:  Work with all plans and project documents. Each document tells you about a di erent part of the project. Review each one, and ask what could keep this plan from going smoothly.  Work at a detailed level. For example, when looking at the WBS, ask what could keep each task from being delivered on time with quality.  Pay more attention to what is outside your control. If we are relying on anything from outside the team, whether it is from a customer, from a vendor, from a consultant, or from some other source, we have less information about whether it will come on time and be of good quality. Items coming from outside the team are called external dependencies, because we are depending on something outside our core team. In some risk management models, every external dependency is automatically a risk. Certainly, we should look at each one and decide what communications, contingency plans, or other actions might be appropriate.  The newer or more innovative a task is, the greater the risk. Is the team using any tools they have not used before Or even new versions of
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