Risk Breakdown Structure (RBS)
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===Risk Analysis=== | ===Risk Analysis=== | ||
| − | Risk analysis is subsequent step of Risk | + | Risk analysis is subsequent step of Risk Identification and aims to evaluate the consequences associated with risks and to assess the impact of risk by using risk analysis and measurement techniques. These techniques involve Qualitative Analysis (description, likelihood of happening and impact of the risk to the project), Quantitative Analysis (sensitivity analysis, Monte Carlo, decision trees etc.) |
Many tools can be used to communicate identified risks to project stakeholders such as risk registers, risk matrix and risk map. Among them, the hierarchical description of risks using the Risk Breakdown Structure (RBS) is a very practical tool, which makes risk management easier. It can be used in the risk identification stage and it can provide support in the later stages (risk assessment and risk response) since it offers an overview of the risks which affect the project <ref name="Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"> Rasool Mehdizadeh. (2012)."Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"</ref> | Many tools can be used to communicate identified risks to project stakeholders such as risk registers, risk matrix and risk map. Among them, the hierarchical description of risks using the Risk Breakdown Structure (RBS) is a very practical tool, which makes risk management easier. It can be used in the risk identification stage and it can provide support in the later stages (risk assessment and risk response) since it offers an overview of the risks which affect the project <ref name="Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"> Rasool Mehdizadeh. (2012)."Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"</ref> | ||
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| + | ===Risk Response Planning=== | ||
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| + | The step after risk identification and risk analysis is to strategically plan actions focusing on the most significant risks, in a way to increase the possibility of success and minimize as possible the impacts of the threats on the project. This process aims to determine effective response actions that are appropriate to the priority of individual risks and to the overall project risk. It takes into account the stakeholders‟ risk attitudes and the conventions specified in the Risk Management Plan, in addition to any constraints and assumptions that were determined when the risks were identified and analyzed.<ref name="Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"> Rasool Mehdizadeh. (2012)."Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"</ref>. When the response actions are applied, they affect the project objectives and can generate additional risks. These are known as secondary risks and have to be analyzed and planned for in the same way as those risks which were initially identified <ref name="A Guide to the Project Management Body of Knowledge - Fourth Edition">Project Management Institute, (2009),"A Guide to the Project Management Body of Knowledge - Fourth Edition"</ref>. | ||
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| + | The next step after identification and analysis of project risk is to develop options, and determine convenient actions, focusing on the most significant risks, in order to shift odds in favor of project success and to minimize the negative impacts of threats on project objectives. This process aims to determine effective response actions that are appropriate to the priority of individual risks and to the overall project risk. It takes into account the stakeholders‟ risk attitudes and the conventions specified in the Risk Management Plan, in addition to any constraints and assumptions that were determined when the risks were identified and analyzed. When the response actions are applied, they affect the project objectives and can generate additional risks. These are known as secondary risks and have to be analyzed and planned for in the same way as those risks which were initially identified (PMI, 2011). | ||
Revision as of 18:22, 19 February 2022
Developed by Dimitrios Machairas
A Risk Breakdown Structure is a tool that depicts in the form of a graph the risks a project might face as it develops. Commonly, this tool's structure follows a hierarchical representation of risk, starting with the top levels and consequently moving down to more specific risks. The scope of this tool is to help project managers map out the possible risk exposure of the project - every parameter that might affect the regular progression of the project.
Risk Breakdown Structure (RBS) is a tool developed by Dr. David Hillson and he describes it as: "A Source-oriented grouping of project risks that organize and defines the total risk exposure of the project. Each descending level represents an increasingly detailed definition of sources of risk to the project."
Contents |
Introduction
Risk management is a systematic process of identifying, assessing and responding to project risk [1]. The overall goal of the risk management process is to maximize the opportunities and minimize the negative consequences of risk threats [1]. Project Risk Management aims to identify and prioritize risks in advance of their occurrence and provide action-oriented information to project managers. This orientation requires consideration of events that may or may not occur and are therefore described in terms of likelihood or probability of occurrence in addition to other dimensions such as their impact on objectives [2]
Risk identification
A risk cannot be managed unless it is first identified. Consequently, after risk management planning has been completed, the first process in the iterative Project Risk Management process aims to identify all the knowable risks to project objectives [1]. Risk identification is the process of systematically and continuously identifying, categorizing, and assessing the initial significance of risks associated with a project [3]. Risk identification describes risks that can potentially affect the project. Participants in risk identification activities can be the following: project manager, project team members, risk management team (if assigned), experts that are not member of project, customers, end users, other project managers, stakeholders, and risk management experts [4]
Techniques used for risk identification include brainstorming and workshops, checklists and prompt lists, questionnaires and interviews, Delphi groups or Nominal Group Techniques, and various diagramming approaches (cause–effect diagrams, systems dynamics, influence diagrams, etc.)[5]
Risk Analysis
Risk analysis is subsequent step of Risk Identification and aims to evaluate the consequences associated with risks and to assess the impact of risk by using risk analysis and measurement techniques. These techniques involve Qualitative Analysis (description, likelihood of happening and impact of the risk to the project), Quantitative Analysis (sensitivity analysis, Monte Carlo, decision trees etc.)
Many tools can be used to communicate identified risks to project stakeholders such as risk registers, risk matrix and risk map. Among them, the hierarchical description of risks using the Risk Breakdown Structure (RBS) is a very practical tool, which makes risk management easier. It can be used in the risk identification stage and it can provide support in the later stages (risk assessment and risk response) since it offers an overview of the risks which affect the project [5]
Risk Response Planning
The step after risk identification and risk analysis is to strategically plan actions focusing on the most significant risks, in a way to increase the possibility of success and minimize as possible the impacts of the threats on the project. This process aims to determine effective response actions that are appropriate to the priority of individual risks and to the overall project risk. It takes into account the stakeholders‟ risk attitudes and the conventions specified in the Risk Management Plan, in addition to any constraints and assumptions that were determined when the risks were identified and analyzed.[5]. When the response actions are applied, they affect the project objectives and can generate additional risks. These are known as secondary risks and have to be analyzed and planned for in the same way as those risks which were initially identified [1].
The next step after identification and analysis of project risk is to develop options, and determine convenient actions, focusing on the most significant risks, in order to shift odds in favor of project success and to minimize the negative impacts of threats on project objectives. This process aims to determine effective response actions that are appropriate to the priority of individual risks and to the overall project risk. It takes into account the stakeholders‟ risk attitudes and the conventions specified in the Risk Management Plan, in addition to any constraints and assumptions that were determined when the risks were identified and analyzed. When the response actions are applied, they affect the project objectives and can generate additional risks. These are known as secondary risks and have to be analyzed and planned for in the same way as those risks which were initially identified (PMI, 2011).
Project Risk Management is defined as: “Project Risk Management includes the processes concerned with conducting risk management planning, identification, analysis, responses, and monitoring and control on a project.”[1] “The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of negative events in the project.”[1]
In the PMBOK® Guide – Fourth Edition, “project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.”[1]
Project Risk Management (PRM) is a systematic process of identifying, assessing and responding to project risk. The overall goal of the risk management process is to maximize the opportunities and minimize the negative consequences of risk threats.
Relation with Work Breakdown Structure (WBS)
Risk Breakdown Structure Template Example
How to Use the RBS
Risk identification aid
Risk assessment
Risk reporting
Drawbacks of the RBS
References
Hillson, David. (2003). Using a Risk Breakdown Structure in project management. Journal of Facilities Management. 2. 85-97. 10.1108/14725960410808131.
Munier, Nolberto. (2014). Risk management for engineering projects: Procedures, methods and tools. 10.1007/978-3-319-05251-9.
Project Management Institute. (2008). A Guide to the Project Management Body of Knowledge
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Project Management Institute, (2009),"A Guide to the Project Management Body of Knowledge - Fourth Edition"
- ↑ Project Management Institute. (2009). "Practice standard for project risk management. Newtown Square"
- ↑ Al-Bahar, J.F. and Crandall, K.C. (1990), "Systematic Risk Management Approach for Construction Projects", Journal of Construction Engineering and Management
- ↑ Mojtahedi, Mohammad & Mousavi, Sana & Makui, Ahmad. (2010). "Project risk identification and assessment simultaneously using multi-attribute group decision making technique", Safety Science
- ↑ 5.0 5.1 5.2 Rasool Mehdizadeh. (2012)."Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"
