What is Risk - YouTube

What is a risk?

In this video, we are not going to talk about the definition of risk. Because that is not the issue. Just pick one. Here you go.

“Risk is an effect of uncertainty on objectives”.

The main issue is, that during risk sessions confusion will arise on the sequence: risk, causes and effects.

When is something a risk?

And when is something a cause? or an effect?

Don’t worry, let’s explain this step by step.

Most important, is that risks have an effect on objectives.

Consequently, if you don’t have objectives defined, then it is not very useful to identify risks.

Let’s take Charlie for example.

One of his daily objectives is to arrive at work in time.

With this objective in mind, what risks do you see?

In other words, what undesirable events can happen that will hinder Charlie from arriving at work safely and on time?

One might say heavy rain. But is this a risk?

Heavy rain causes a decrease in road visibility and that in turn causes an accident.

That accident will cause Charlie to be late for work.

Let’s investigate this event tree.

The difficult part is to pinpoint which event we identify as the risk.

The last event “being late for work” is the objective. Well, it’s the opposite of what you want to achieve, but it’s directly linked.

So we cannot say that “being late for work” is the risk.

The question is what caused you to be late? In this case it is you being involved in an accident.

We can then identify this “cause” of the “objective” as a risk.

The effect of the risk: having an accident, is being late for work. And the cause of the risk is decreased visibility of the road.

The accident has a direct effect on the objective. While heavy rain is an indirect cause.

You could also identify more causes and effects for the same risk.

Let’s try another one. So someone mentions being late as a risk, but he also mentions that it is due to heavy congestion.

During a risk brainstorm, we are bound to have risks being mentioned that are actually objectives.

Most common examples are: project goes over budget,

project gets delayed,

reputation damage

and employee gets injured.

All of these are goals of the project. You want the project to be done within time and budget, and with minimal human injury.

These goals are already defined as impact classes you score the risks on.

But don’t worry when someone raises objectives or goals as risks. Because we can extract the causes of these risks as the actual risks.

In our case the risk is traffic congestion.

Other examples of risks are:

For example this one,

This one,

Or this one

So here are the take aways.

Filter out the risks that are objectives, and pick their causes as the risks.

Ask yourself if the risk has a direct negative effect on the objective.

Identify follow-up events that will eventually lead to affecting the objective.

The event that has a direct effect on the objective will be your risk.

Most importantly, nothing is wrong and all inputs are valuable.

Sometimes you just need to drill down and analyze to get the proper risk description.

Don’t forget: the more often participants get involved in risk assessments, the better they get in identifying risks, causes and effects.

So make it more fun for them and get started with RISKID, the collaborative risk management tool.