Risk Register analysis

Developed by Dorothea Georgiadou

In an age where the economic, social, and political environment is constantly shifting, there is an urgent need to study the risks that may threaten the success of a project. It is particularly important to study the risks that may adversely affect the project and lead to events that might have as a cause the exceeding of the agreed budget and time. For this reason, the risk management planning should identify and describe in detail the potential risks by providing the needed information for the actions that should be done for eliminating their negative impact. The high uncertainty that exists in projects necessitates the use of a management tool that will control the risks. In this article the risk management framework ‘’Risk register’’ is explained. Risk register is a tool that covers and studies many aspects of risk management processes. More specifically, the aim of this article is to explain how this tool can be used for the identification, assessment, and treatment of potential risks. Moreover, the importance of the risk register in the risk analysis process is outlined, as not only the qualitative aspects of a project are taken into consideration but also it prioritizes the risks based on their impact and probability to happen during the implementation phase of a project. This constitutes one of the positive features of this framework as through the analysis of this article it can be concluded that risk register helps project managers to have a better understanding and ways of managing the potential risks. Finally, the article analyzes along with the benefits the limitations of this risk management tool.

Introduction

In an ever-changing environment, a projects’ success is associated with a high level of uncertainty. Projects are threatened by external and internal factors throughout their lifecycle and hence the presence of project risk management is more than necessary. In the ‘Practice Standard for Project Risk Management’, risk management is an approach that plays a vital role in the strategic and decision-making processes since adjustments in the project management planning can be done after the identification of the projects’ challenges. The risk register framework is used to support the risk management process in order to eliminate the negative impact that the various threats might have on a project. Threats could come from the external and internal environment of the company. The external risks are associated with the economic, social, political, and technological environment, while the internal threats include risks that are related to human actions and estimations. For example, it is possible for people to make wrong estimations because of inexperience and underestimation of some threats. This high level of uncertainty makes it increasingly necessary to use a model that assists the risk management process in a more effective way.

The role of risk register

In ‘Practice Standard for Project Risk Management’, the risk register is defined as a tool that is used for the documentation of the identified risk. The risk register is a framework used for the risk management planning by providing the needed information that will be the steppingstone to overcome potential threats. It is an essential model for the project management process as it incorporates vital information for the implementation of projects’ planning. The importance of the risk register is hidden in the fact that it can assist project managers with tackling potential threats and to have a better and clearer overview of the internal and external risks that might menace the success of the project. The aim of the risk register is the identification, assessment, evaluation of importance, and managing of the potential risks. More specifically, the uncertainty that exists in projects makes the use of a model that provides various information for the threats of the projects necessary.

In the PMBOK guide it is outlined that the tool risk register can be used in different phases of a project. Firstly, it can be used at a very early stage of a project in order to provide information for the risks that might be a threat. Secondly, as the project continues, new threats are recorded and documented in the risk register. In other words, the risk register is used to update the new risks and inform the stakeholders how they should monitor the new threats. Finally, it documents all the risks that have been recorded after the completion of a project.

As can be seen in the figure, the implementation of the risk register model follows four processes. Firstly, the risks have to be identified. Secondly, they have to be assessed based on their impact and probability. After risk assessment, it is important to define the actions that must be taken, in order to manage the risks. The final process of risk register model follows, deals with the ways the risks can be monitored. ,

The risk register is a framework that has the form of a table where each column represents different characteristics of the potential risks. One of the risk components analysed in this study is a brief description of every risk the project managers have recognized. This helps the project managers not only to clarify the risks but also to understand why they are threatening the project’s success. Secondly, for the assessment of the risks, their probability and impact on the project are examined. Furthermore, in ‘Practice Standard for Project Risk Management’ it is stated that the evaluation of the risk is depending on their impact and their frequency to happen. For instance, the risks that have high impact and probability to occur, are risks with higher importance than the risks with low frequency and impact. The identification of the risks’ importance is an essential element for project managers to know which risks are needed more attention and time for setting up a plan in order to overcome them. Furthermore, based on the PMBOK guide the risk register also includes information about the person who must tackle every risk and the actions that he has to take to eliminate its negative consequences. The above elements are demanding high attention as they are mainly focused on dominant areas of the risk management process which are the identification of the threats, the evaluation of their importance, and the course of action that should be taken.