Risk analysis

Abstract

This article may overlap with Risk Management but will attempt to discuss different approaches to analysing the risk when managing projects/portfolios/programs Several tools will be mentioned and explained briefly, but (in order to allow the full use of the wiki) not be described in detail

Definition

According to the ISO Guide 73-2009, Risk analysis is the “Process to comprehend the nature of risk and to determine the level of risk”

ISO 31000 describes Risk analysis as the process which “provides an input to risk evaluation and to decisions on whether risks need to be treated, and on the most appropriate risk treatment strategies and methods”.

This process mentioned is the computational part of risk management where different aspects, variables and factors are used to estimate the risk involved with a specific feature, action, decision, condition ect. The outcome of this computation is a quantified number or percentage which can then be used as an evaluation criterion, determining either which option to select or if it is safe to proceed down the investigated path.

Main features of risk analysis

Input:

Purpose

Consequences

Likelihood / Probabilities

Existing control features

Effectiveness of existing control features

Causes of risk

Sources of risk

Factors influencing any of the above

Interrelations / Interdependence

Type of risk

Information available

Risk criteria

Output:

Combined Likelihood / probability

Consequences

Confidence in:

Information Uncertainty

Information Availability

Information Quality

Information Quantity

Ongoing relevance of information

Limitations

Reference

ISO Guide 73-2009 – Risk Management Vocabulary

ISO 31000 - Risk management - Principles and guidelines

ISO 31010 - Risk management

International Journal of Project Management 32 (2014) - Vahid Khodakarami , Abdollah Abdi - Project cost risk analysis: A Bayesian networks approach for modelling dependencies between cost items