A project risk is an uncertain event or condition that can have positive or negative impact on at least one of the project objectives whereas an issue (a.k.a. problem) is something that has already occurred or is currently happening.
Risks are uncertain in nature i.e., they may or may not occur. There is probability attached with risk – it has not happened till now but there is a chance that it could happen in future. On the other hand, issues are not uncertain.
Let us understand the difference between these project management terms using definitions and examples.
What is a Risk?
Let us look at the English meaning of risk.
exposure to the chance of injury or loss; a hazard or dangerous chance
the possibility that something bad or unpleasant (such as an injury or a loss) will happen
A situation involving exposure to danger
It is quiet apparent from the English definitions that risk involves chance or possibility. It is an event that may or may not happen.
On the other hand, an issue is an event that will definitely occur in future or has already occurred or is currently occurring.
Project Management Definition of Risk
An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.
You can refer to Max Wideman Glossary to read some other standard definitions.
Looking closely at the definition, it is quite apparent that there are 2 main components of Project Risk – uncertainty (probability) and effect (impact). An event can be termed as risk if it is likely to occur and it effects at least one of the project objectives.
A risk can impact one or more project objectives, which include scope, time, cost, quality and other objectives.
The English meaning of risk is always considered negative but a project risk could be both negative or positive. Risks with a negative impact are called threats whereas risks with a positive impact are called opportunities.
Project Risk vs. Issue/Windfall
A negative risk that has already occurred is considered as an issue or a problem whereas a positive risk that has occurred is considered as a windfall. Issues & windfalls are certain and have already happened.
It is important to analyze risks and issues (problems) separately. Here are the main points of difference between them:
|Risks are uncertain and they have a probability of occurrence.||Issues are definite and certain. They have already occurred or are currently happening.|
|Risks should be prioritized and only prioritized risk should be resolved. Project team has limited time, budget, and resources. They should focus their energy on most important events.||Most of the problems should be solved.|
|Risks are recorded and maintained in Risk Register.||Issues are recorded and maintained in Issue Log.|
Examples of Issues and Risks
- A project team member might leave the company is a risk whereas the one who has already left is called a issue.
- Supply of equipment might be delayed is a risk whereas if the equipment was supplied late then it is an issue.
- Approval from the Government authorities might happen early is a risk (opportunity). But is the approval happens before time then it is a windfall.
As part of the endeavor, all the Project Managers started preparing weekly status reports of their respective projects. The project managers highlighted pertinent Project Risks in their respective weekly status reports.
Now, there is one Project Manager who always reports issues as risks. And whenever I have tried to reason with him, his standard response is “How does it matter? Whether you call an event a risk or an issue; the situation has to be resolved”.
I have tried to reason with him on multiple occasions. But life is going on and this Project Manager still reports in the same manner.
I have observed that the term risk is used very loosely. It is often confused with issue or problem. Many practitioners think that they are one and the same thing.
It is very important to differentiate between not only these two terms but also other standard terms of project management.
Projects are done by the project team. If the Project team members have different understanding of different project management term(s) then precious hours are wasted is resolving confusion arising due to miscommunication & misunderstanding. A good project manager should always avoid the confusion and improve team productivity.
Over To You
Is your definition of project risk different from the one explained above? How do you use the terms issue and problem in your project?
Please leave a comment.