Commonsensical Project Risk Definition
Definition of Risk
The official definition of a Risk & Risk Management as per the PMBOK Guide is:
A Risk is an uncertain event or condition that if it occurs, has a positive or negative effect on a Project’s Objectives.
I have a confession; the first time I read this it was like reading VCR instructions. I had to read it over and over again just to make the statement sound right in my head. After a while I realized exactly what they were trying to say. Simply put:
Project Risk is the possibility that something will not happen as planned.
It really is that simple. So why doesn’t the PMBOK just say it that way? Unfortunately, too many project managers and business analysts assume that something not planned has to be a bad thing. However, change is not always bad.
If someone you never met before suddenly gifted you a million dollars tax free with no strings attached, it would change your household budget. Would that be a bad thing?
Let’s update the definition just a little to remove the assumption:
Project Risk is not good or bad, it is simply the possibility that something will not happen as planned.
Project Risk is never certain. A certainty that something will not happen as planned is called an issue.
By recognizing project risk, project managers and business analysts can attempt to avoid a problem by communication, mitigation and management.
So now that we know the definition of risk, how do we state or define a specific risk?
A risk statement is made up of 3 parts:
- Action or Deliverable – the task or event that is expected to be completed.
- A Plan – a defined way in which something is expected to take place. *This does not mean a formal project plan written in Microsoft Project or Excel.
- Risk Factor – something that could cause an alteration to the cost, timing, or scope of the action or deliverable.
Here is a basic formula you can follow:
The _______________ is planned _______________, since _____________ this may _______________.
The scope statement sign off is planned to be completed by the end of the month, since the stakeholder is frequently called away to another more pressing project this may be delayed or take longer than expected.
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