Risk Management: Risk Identification Techniques PDF

Risk Management: Risk Identification Techniques Prepared by: Dwight D. Dacquel, MBA Objectives: At the end of this session, you will be. able to: 1. Utilize various techniques for risk identification ( e.g. brainstorming, checklist, SWOT an...

Risk Management: Risk Identification Techniques Prepared by: Dwight D. Dacquel, MBA Objectives: At the end of this session, you will be. able to: 1. Utilize various techniques for risk identification ( e.g. brainstorming, checklist, SWOT analysis) 2. Develop skills to conduct risk assessments Question: "Can you think of a situation where a small, unnoticed problem turned into a big issue? What could have been done to prevent it?" Risk Management: Process Pla n Monito Identif r y Respond Analyz e  Risk Management: Process Plan  A risk management plan should be defined early in the project and in consultation with the project team.  May be part of the project management plan or exist as a separate document (Integrated approach & Standalone approach)  Risk management methodology Plan (process, tools, templates)  Stakeholder risk tolerance (High Risk Monito Identify r or Low Risk Tolerance) Respond Analyze  Attitudes toward risk: avoid, tolerate, embrace, expect, re- interpret  Risk Management: Process Plan  A risk management plan should be defined early in the project and in consultation with the project team.  May be part of the project management plan or exist as a separate document (Integrated approach & Standalone approach)  Risk management methodology Plan (process, tools, templates)  Stakeholder risk tolerance (High Risk Monito Identify r or Low Risk Tolerance) Respond Analyze  Attitudes toward risk: avoid, tolerate, embrace, expect, re- interpret  Risk Management: Process Identify RISK IDENTIFICATION  Is a process of documenting any risk that could keep an organization or program from reaching its objective.  It is the first step in the risk management process, which is designed to help companies understand and plan for Plan potential risks.  Examples of risk includes theft, business Monito Identify r downturns, accidents, lawsuits or data breaches Respond Analyze  RISK IDENTIFICATION Risk identification is a crucial step in risk management, involving the systematic examination of potential threats and opportunities that could affect a project, organization, or any endeavor. RISK IDENTIFICATION Here are some common categories and examples of risks that can be identified: Project Risks Operational Risks Financial Risks Compliance Risks Strategic Risks Natural and Environmental Risks Human Resource Risks THE GOALS OF RISK IDENTIFICATION Recognize potential risks Risk prioritization Improvement of preparedness Risk awareness Resource allocation Support decision-making RISK IDENTIFICATION TOOLS AND Documentation Reviews TECHNIQUES Brainstorming Delphi Technique SWOT Analysis Risk Breakdown Structure (RBS) Assumption Analysis Root Cause Analysis Cause and Effect Diagram (Ishikawa) FMEA (Failure Mode and Effects Analysis)  Risk Management: Process Brainstormin  g  Group technique All ideas are valuable (one often leads to the next)  Delphi Technique  Experts respond in  writing Responses compiled to reach Plan  consensus Risk Breakdown Structure   Hierarchal structure (RBS) Monito Identify r risks by category  Cause and Effect Diagram Respond Analyze  DELPHI TECHNIQUE The Delphi Technique is a structured, systematic method used to gather expert opinions, build consensus, and make informed decisions on complex issues. It is often used in forecasting, problem-solving, and decision-making processes where diverse perspectives and expert judgment are critical. Key Features: - Anonymity of participants - Iterative Process - Controlled Feedback - Statistical Aggregation Plan Steps in Delphi Technique 1. Selection of Experts 2. Problem definition Monito Identify 3. First round of questionnaires r 4. Feedback and summary 5. Subsequent rounds Respond Analyze 6. Final analysis and reporting  DELPHI TECHNIQUE Example of Delphi Technique A government agency wants to predict how artificial intelligence will impact employment in the next decade. Step 1: Select a panel of experts from academia, technology companies, and labor organizations. Step 2: Ask the experts to share their initial predictions on how AI will affect job creation and job loss. Plan Step 3: Summarize their responses, noting areas of agreement and conflicting opinions.Monito Identify r Step 4: Conduct a second round of questioning, refining the focus based on the Respond Analyze first-round results. Step 5: Repeat until consensus is reached Risk Breakdown Structure (RBS) Example of an RBS Imagine a software development project. The RBS might look like this: Level 1: High-Level Categories Technical Risks Project Management Risks Level 2: Subcategories Technical Risks: System integration issues Technology obsolescence Insufficient testing Project Management Risks: Plan Schedule delays Budget overruns Monito Identify Scope creep r Level 3: Specific Risks Respond Analyze Under System Integration Issues: Incompatible software components Misaligned APIs  Risk Management: Process  Cause and Effect Diagram  Fishbone/Ishiskawa Diagram Cau Cau se se Plan Impact of the Monito Identify Risk r Respond Analyze  Risk Management: Process  Cause and Effect Diagram  Fishbone/Ishiskawa Diagram Project Plan notmay be ready on time Monito Identify r Respond Analyze FAILURE MODE AND EFFECTS ANALYSIS (FMEA) FMEA is a systematic, proactive risk assessment tool used to identify potential failure modes in a system, product, or process and to evaluate their causes and effects. The goal is to prioritize these risks and implement strategies to mitigate them before they occur. It is widely applied in industries like manufacturing, aerospace, healthcare, and software development. Steps in FMEA 1. Identify the process or system Plan 2. List failures mode 3. Determine effects of each failure mode 4. Identify causes of failure Monito Identify 5. Evaluate risk r Rate using three criteria (Severity, Occurrence, & Detection) Respond Analyze 6. Prioritize risks 7. Develop and implement actions FAILURE MODE AND EFFECTS ANALYSIS (FMEA) Scenario: A coffee machine manufacturer conducts FMEA on its product. FMEA Formula: Calculate the Risk Priority Number (RPN): RPN=S×O×D Plan Monito Identify r Respond Analyze COMPARISON OF FMEA, RBS, RCA, AND Cause and Effect Diagram Plan Monito Identify r Respond Analyze  Risk Management: Process  Writing risk statements  Due to [some cause], an [uncertain event/condition] may occur, which could lead to [a consequence to project objectives].  Due to a lack of awareness of the mentoring program, we may not secure enough mentors, which could limit the Plan number of mentor/mentee pairs.   Cause = lack of awareness Monito Identify  Condition = not securing enough mentors r Consequence = limited number of pairs Respond Analyze LIMITATIONS OF RISK IDENTIFICATION Limited Knowledge and Experience Data Dependence Focus on Past IDENTIFYING RISKS INVOLVES CONSIDERING WHAT, WHEN, WHY, WHERE, AND HOW THINGS CAN HAPPEN. What are the sources of risk or threat? What could happen? Where could it happen? When could it happen? How did it happen? Causes Business Consequences Business areas/stakeholders affected?  CHARACTERISTICS OF SITUATIONS INVOLVING Probability RISK and Impact Variability Potential for Loss Ambiguity Exposure Decision-Making Under Uncertainty Dynamic Nature Interdependence THANK YOU !