I have observed that the term Project Risk is used very loosely. It is often confused with Issues or Problems. You would be wondering what is the difference between project management risk and issues. They are one and the same thing. But, they are not. I have given definition and a few examples project risk to clarify.
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.
English Meaning – What is 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. If an event has already happened or will definitely happen then it cannot be categorized as a risk – it is called an issue or problem.
Let me share a little anecdote with you.
Project Management Definition – What is Project 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. If an Event has already occurred then it is a problem.
A Project Risk with a negative impact is called a Threat while the one with a positive impact is called an Opportunity. You can read these articles to find out strategies for resolving Threats and Opportunities.
Project Risk, Issue, And Windfall
A negative Project Risk that has already occurred is considered as an Issue or a Problem whereas a positive one that has occurred can be considered as a Windfall. Issues & windfalls are certain and have already happened.
Project Issues And Risks Examples
- 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 believe there are many important reasons why project risks and issues or problems should be analyzed separately. Some of the main reasons for separate analysis are:
- Most of the problems should be solved.
- Only prioritized project risks should be resolved.
- Project team has limited time and budget. They should focus their energy on most important events.
- A separate Risk and Problem Database has a better utility for future projects.
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.