It Goes Beyond a Simple Description
A clear risk description, typically found in the first column of the risk register, is crucial for effective risk management. This simple yet vital component supports the entire risk process, leaving no room for vagueness or misinterpretations. Unfortunately, neglecting this step can lead to inaccurate risk assessments, impacting the project’s success.
The risk description
A key part of understanding any risk is its description or definition, usually found in the first column of the risk register. This simple description supports the entire risk process. There is no room for vagueness or misinterpretations. Unfortunately, we often spend little time or thought on this crucial component, which can lead to overestimating or underestimating the risks of the project in the long run.
The risk register
When a project starts, a brand-new risk register is created, filled with our understanding of risks and the requirements for the job at hand. The team sets up for a proper risk identification meeting, inviting participants to contribute. Before you know it, the risk register takes on a life of its own, containing details that should assist in making the right decisions for the project going forward.
For many projects, this is how we establish our risk register. As time progresses, and with the help of progressive elaboration, the project manager (PM) and the team generate a valuable risk register. Over the years, I have seen this exercise create a small but fixable problem that could improve our risk management if addressed early in the process. This problem arises from trying to cut time out of the identification process. We do not spend enough time on our risk descriptions, so they are not framed properly.
Common issues
Look at any recent risk register from your organization. What do you see in the risk description column? For most, it will be something like weather, inflation, rise in gasoline prices, time to production, quality of part ABC…
What is wrong with this picture?
These descriptions do not provide a complete or clear picture of the risk. They do not make it easy to analyze or assign response strategies. To make informed decisions, we need to understand the extent or magnitude of the risk.
In some organizations, this description is broken into several fields which makes clarity more difficult as the mind needs to append all these fields in order to have a complete picture.
What is a proper definition that would help us in our risk management process?
Years ago, when I was first introduced to risk management, a wise manager in the risk department taught me a simple formula that I have used countless times and taught to many students:
IF [Event], THEN [Consequences]
This formula is as basic as it gets and easy to remember. It flows naturally as one thinks about it, but it can be problematic as it overlooks a key element of the equation.
Limitations of the IF-THEN Formula
While the IF-THEN formula is straightforward and easy to use, it may not be the ultimate option for risk description. One key component it often misses is the context surrounding the risk. Context includes relevant facts and circumstances that can significantly influence the risk’s impact and likelihood. Without context, the risk description might lack depth and fail to capture the full picture.
For example, simply stating “IF weather delays, THEN project timeline extends” does not provide information about the severity of the weather conditions, the project’s location, or the time of year—all of which are crucial for understanding the risk’s true impact.
I have since researched this topic and found others that go deeper in their elaboration of risk. In a briefing published in 2004, Dr. David Hillson (1), whom I consider a guru in project risk management, suggested that risk events should be documented based on three (3) key components: management, ownership, and reporting. Therefore, one description must address various factors, not all contained in a single word.
Listed below are some common description formulas used in organizations that focus on three (3) elements to describe a risk:
- As a result of [definite cause or trigger], [uncertain risk event] may occur, which would lead to [impact on objectives](TEI model)
- If [condition(s)] occurs during the project, then a negative/positive [impact] on [consequence(s)] may occur
- Context (relevant facts), Source(s) of uncertainty, Impact
- [Event that affects objectives], caused by [cause(s)], resulting in [consequence(s)]
- A condition, an uncertain outcome, and the likely consequences (negative) if not managed
Where did we lose our way?
Over time, project managers have started to pay less attention to their risk descriptions and the impact of not having a fully developed statement. Part of the problem is related to rushing out of planning, which causes issues in several areas (e.g., weak requirements gathering, lack of deeper analyses) including risk description. Cutting corners here leads to problems later in risk planning, as we need precise information to analyze, provide risk response strategies and plans, and assign ownership to risks.
Why is detailed risk description important?
A detailed risk description is crucial because it lays the foundation for effective risk management. Without a clear understanding of the risk, it becomes challenging to assess its impact, likelihood, and the appropriate response strategies. A well-defined risk description helps in:
- Risk Analysis: Understanding the nature and extent of the risk allows for better analysis and prioritization.
- Response Planning: Clear descriptions enable the development of targeted response strategies that address the specific aspects of the risk.
- Communication: Detailed descriptions facilitate better communication among stakeholders, ensuring everyone has a shared understanding of the risks.
- Ownership Assignment: Precise descriptions help in assigning ownership to risks, ensuring accountability and effective management.
How to improve risk descriptions?
If your risk register is lean in the definition section, ask your team to slow down when describing risk events. Consider having a review session on best practices, including some practice with the formulas introduced in this article. Here are some tips to improve risk descriptions:
- Be Specific: Avoid vague terms and provide specific details about the risk event, its causes, and potential impacts.
- Use Structured Formats: Utilize structured formats like the TEI model or the IF-THEN formula to ensure consistency and clarity.
- Involve Stakeholders: Engage stakeholders in the risk identification process to gather diverse perspectives and insights.
- Review and Revise: Regularly review and revise risk descriptions to ensure they remain accurate and relevant as the project progresses.
In my office, I have a laminated copy pinned to my wall as a reminder to do it right and slow down to avoid problems later.
At the end of the day, this is about remembering why we do risk management: to deal with our lack of information, which brings uncertainty to the project.
It should start with a properly defined description of the risk event.
(1) http://www.risk-doctor.com/pdf-briefings/risk-doctor09.pdf Risk Doctor briefing #9, 2004 by Dr David Hillson
PML would like to extend a huge thank you to Sylvie for sharing her knowledge and wisdom with the PML community! Learn more about her below and reach out to connect!
About the Author
For those who don’t know Sylvie, she has been involved in Project Management in several industries for the past 25+ years. Sylvie previously worked for a top 5 Consulting Firm, where she oversaw projects in the IT, Banking, Health, Government and Securities sectors as well as a Manager in the Risk Management practice.
Sylvie went on to establish her own consulting practice assisting organizations in establishing processes, strategies and developing methodologies. She was instrumental in the development of methodologies for the creation of PMOs as well as for the evaluation, assessment and review of projects in peril.
Sylvie is currently a professor and the coordinator for the Project Management Certificate Program at Durham College. She previously taught at the University of Toronto continuing studies department, assisting hundreds of potential PMP® achieve their certification. She is a frequent lecturer, presenter and blogger (PMWorld360°, ProjectBites, LinkedIn) on all things related to project management. She holds several certifications and has the honour of having been named Fellow of the Project Management Association of Canada (FPMAC).
Sylvie’s involvement with PMI® is long standing including over 12 years on the Board of Directors of the local Chapter where she led initiatives in education, mentoring and held the role of President for two terms. She recently accepted a role back on the BOD for PMI-DHC while still volunteering by becoming their resident “bookworm”, helping people find great reads to supplement their learning about Project Management and everything connecting to it.
If you see her at an event, say hello and get to know her!
Connect directly with Sylvie at https://www.linkedin.com/in/sylvie4sresolutions/
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