Risk-based Learning

Revision as of 14:17, 19 February 2022

Developed by Gudrun Gudnadottir, February 2022

Abstract

Risk is an inevitable component of project management. A project risk is any unanticipated event that may occur during a project that may have a negative or positive impact on the project's objectives. ^[1] Risk arises when there is a chance of multiple outcomes and the final outcome is uncertain.^[2]

The meaning of the term risk-based learning is to learn and understand the risks that are involved in a project and make decisions based on the information. The higher the risk associated with a certain area of a project, the more effort needs to be put into learning all information about that area as possible. The potential of having the capacity to make informed decisions in order to minimize needless risks in projects is a fundamental reason for creating and adopting risk assessment systems. To do so, one must first understand about potential risks and how to manage them. Risk-based learning assists in the identification, assessment, and evaluation of possible risks.^[3]

In this article, the importance of risk-based learning is discussed, as well as risk-based project management. Application of risk-based learning will be discussed, as well as its limits.

The Big Idea: An Introduction

What is Risk-based Learning?

The definition of risk-based from the Cambridge Business English Dictionary is:

1. “Done or calculated according to how much risk is involved.” ^[4]

Risk-based Thinking

Risk-based thinking in project management is crucial for determining risk levels and taking measures to address identified risks.

Application

Risk-based Project Management

Risk-based project management is learning how to manage the risk and uncertainty that comes with each project. When uncertainty is decreased, if not totally removed, the project's value is preserved and predicted results are attained.^[5]

What is a risk in project management?

There are five factors that needs to be considered when determining what is a risk in project management:

1. Risk Identification

Risk identification is the process of determining what could happen that will have an impact on your project. Risks should be recognized and addressed as early as possible in the project. Risk identification occurs throughout the project life cycle, with a focus on major milestones. Some risks will be obvious to the project team while others will require more effort to identify, but will still be predictable.

2. Risk Analysis

Risk analysis entails evaluating how project goals and objectives may alter as a result of the risk event's influence. Once the risks have been identified, they are analyzed to determine the qualitative and quantitative impact of the risk on the project so that suitable measures may be performed. To analyze risks, the probability and impact of the risks need to be determined.

Probability:
Probability refers to the likelihood of a risk occurring. To analyze risks, the following guidelines are employed:

• High probability – (80 % ≤ x ≤ 100%)

a. High probability – (80 % ≤ x ≤ 100%) b. Medium-high probability – (60 % ≤ x < 80%) c. Medium-Low probability – (30 % ≤ x < 60%) d. Low probability (0 % < x < 30%)

3. Probability

What’s are the chances of it happening?

4. Impact

What’s the expected outcome?

5. Factors

What events might forewarn or trigger the risk event?

Limitations

Annotated bibliography

1. Dikmena, I., Birgonula, M.T., Anacb, C., Tahc, J.H.M. and Aouadd, G. (2008). Learning from risks: A tool for post-project risk assessment. Automation in Construction, 18(1), 42-50.

In this paper, a learning-based approach is proposed for risk management (RM). In order to implement this approach in practice, a tool has been developed to facilitate construction of a lessons learned database that contains risk-related information and risk assessment throughout the life cycle of a project. The tool is tested on a real construction project.

References

1. ↑ project-management.com. (2022). Common Types of Risk in Project Management 2022. Retrieved from https://project-management.com/types-of-risk-in-project-management/ on February 13th 2022.
2. ↑ Williams, T. (2017). The Nature of Risk in Complex Project. Risk Institute, University of Hull, 48(4), 55-66. Retrieved on February 13th 2022 from https://doi.org/10.1177/875697281704800405
3. ↑ Dikmena, I., Birgonula, M.T., Anacb, C., Tahc, J.H.M. and Aouadd, G. (2008). Learning from risks: A tool for post-project risk assessment. Automation in Construction, 18(1), 42-50. Retrieved on February 13th 2022 from https://doi.org/10.1016/j.autcon.2008.04.008
4. ↑ Cambridge University Press. (2022). risk-based adjective. Retrieved from https://dictionary.cambridge.org/dictionary/english/risk-based on February 13th 2022.
5. ↑ The Art of Service. (NA). Understanding Risk Based Project Management. Retrieved from https://theartofservice.com/understanding-risk-based-project-management.html on February 13th 2022.