![\"Cliff](\"https:\/\/svapm.org\/wp-content\/uploads\/2007\/10\/istock_000002789063xsmall.thumbnail.jpg\")
Most of us know that risk comes inherent with a project because projects involve unknowns. What I find in my project management travels is that many project managers don’t understand the\u00a0difference between a risk\u00a0and a problem. Why is this important?<\/p>\n
A\u00a0risk is an uncertain future event that could have a negative effect (threat) or\u00a0a positive effect (opportunity) on the project objectives.\u00a0But a problem statement describes a 100% certain condition that exists now\u00a0and\u00a0threatens achieving the project objectives. Understanding\u00a0the difference between a project risk (threat) and a problem is important because they are treated differently in project planning and execution.<\/p>\n
A problem statement would be: “We have insufficient resources to\u00a0conduct the beta tests which will delay the project by one week.”<\/strong><\/p>\n A risk statement could be: “We may have insufficient resources to\u00a0conduct the beta tests which would\u00a0delay the\u00a0project by one week.”\u00a0<\/strong><\/p>\n These two statements are very similar but have significantly different meanings for\u00a0a project manager and his stakeholders in\u00a0planning and executing the project.<\/p>\n The first statement is a problem statement and implies almost 100% certainty (very\u00a0few events have 100% certainty). The project\u00a0plan must deal with this real problem on its face value. The project plan must specify how this issue will be resolved before the project plan can be approved. The\u00a0solution may be hiring more resources, outsourcing, dropping the beta test or adding more weeks to the schedule. Whatever the solution, it must be addressed now.\u00a0<\/p>\n The second statement is a risk statement with an implied probability (may have)\u00a0and estimated impact to the project if the risk event occurs.\u00a0The Guide to Project Management Body of Knowledge Once (PMBOK\u00ae<\/sup>) tells us how to manage a risk.\u00a0<\/p>\n Once we have identified the risk, a qualitative analysis is performed to assess the risk consequence or risk score which is used to\u00a0prioritize\u00a0the risk\u00a0relative to other identified project risks. If\u00a0the risk event\u00a0turns out to have a relatively high consequence, a quantitative expected value analysis may be performed to\u00a0estimate the probability of the risk and the expected\u00a0value impact on the project objectives in terms of\u00a0 scope, cost and schedule.<\/p>\n A risk response plan\u00a0should be developed to mitigate or eliminate the risk consequence. Typically, money, time\u00a0and other resources will be\u00a0allocated up front in the project plan to mitigate the high level risk before it occurs.\u00a0After mitigation, any residual risk\u00a0consequence remaining must be estimated. Typically, risk reserves of budget and schedule are allocated to cover the expected value of the residual risks.<\/p>\n You now can see how a project risk\u00a0must be treated differently than a project problem when planning your project. So be very clear and concise when you are describing problems and risks in the project planning process. Be sure that your management, sponsor and stakeholders understand the difference between a problem and a risk.\u00a0\u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":" Most of us know that risk comes inherent with a project because projects involve unknowns. What I find in my […]<\/p>\n","protected":false},"author":12,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[7,9],"tags":[1373,38,1375],"class_list":["post-622","post","type-post","status-publish","format-standard","hentry","category-goals","category-risk-management","tag-goals","tag-project-management","tag-risk-management"],"aioseo_notices":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/posts\/622","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/svapm.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=622"}],"version-history":[{"count":1,"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/posts\/622\/revisions"}],"predecessor-version":[{"id":13836,"href":"https:\/\/svapm.org\/index.php?rest_route=\/wp\/v2\/posts\/622\/revisions\/13836"}],"wp:attachment":[{"href":"https:\/\/svapm.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/svapm.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/svapm.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}