If all the possible combinations of ranking value are calculated for both threats and opportunities the table below is formed. The effect of this is to put more emphasis on impact than on probability. This is because probability scores are defined on a linear scale while impact scores are on a logarithmic scale. Interestingly, a risk event that is low probability/high impact has a different score than high probability/low impact. A risk event of high probability (0.7) and low impact (0.1) would have a ranking value of 0.7 x 0.1 (0.07).A risk event of low probability (0.3) and high impact (0.4) would have a ranking value of 0.3 x 0.4 (0.12).The probability and impact scores are used to arrive at overall values for ranking the risk events. These indicators will be defined according to the context of individual projects and programmes, and set out in the risk management plan. A two month delay on a six month project is very different to a two month delay on a three year project.Īll the impact indicators in the table need to reflect the risk context of the work and in particular the risk appetite of the host organisation. Clearly, the guidelines for what constitutes high or low are not universal. It also provides impact criteria in the three elements of the triple constraint. This ‘risk criteria table’ provides numerical ranges for the probability scale from very low (VLO) to very high (VHI). The example below applied to threats and is adapted from the APM’s PRAM Guide 1. As the complexity of the work increases, the sophistication of the assessment should increase.Ī thorough assessment of risk events for projects of higher complexity and for programmes would have a five point scale with guidelines and numerical values for each point on the scale. Project, programme and portfolio managementĮvery risk event, whether it is a threat or an opportunity, has two characteristics: the probability that it might happen and the impact it would have if it did happen.Įven on the simplest of projects, risk events should be assessed for their probability and impact using a scale such as high, medium and low.
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