Risk Breakdown Structure (RBS)

Revision as of 17:52, 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."

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]

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]

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. ↑ ^{1.0 1.1 1.2 1.3 1.4 1.5} Project Management Institute, (2009),"A Guide to the Project Management Body of Knowledge - Fourth Edition"
2. ↑ Project Management Institute. (2009). "Practice standard for project risk management. Newtown Square"
3. ↑ Al-Bahar, J.F. and Crandall, K.C. (1990), "Systematic Risk Management Approach for Construction Projects", Journal of Construction Engineering and Management
4. ↑ Mojtahedi, Mohammad & Mousavi, Sana & Makui, Ahmad. (2010). "Project risk identification and assessment simultaneously using multi-attribute group decision making technique", Safety Science
5. ↑ ^{5.0 5.1} Rasool Mehdizadeh. (2012)."Dynamic and multi-perspective risk management of construction projects using tailor-made Risk Breakdown Structures"