Jun 29, 2008

SCERT Approach to Risk

A risk is an area of uncertainty.  This uncertainty can turn into risk events that may prove unfavourable to a project.  Risk events are not always necessarily unfavourable. 

Whether is will rain or not, for example, is a risk for someone planning to go on a picnic.  The risk events could be that it will rain heavily, or it will rain lightly, or it will not rain.  The area of uncertainty, that is, the risk, is the possibility of rain.

Managing project risks is about analysing the risks (uncertainties) that a project is facing, identifying the risk events that may come out of that risk, planning responses to these events, monitoring the chances of these events, and executing responses to the risk events.

The SCERT approach to managing risk begins with breaking down the project into manageable components.  Because nothing is certain, every single task in a project has some risk (uncertainty)  Much of that however, is handled in the scheduling process which (must have) used a probabilistic approach (for example a 3-point estimation in PERT).

We only look at the major uncertainties. 

Break the project into components. SCERT recommends no more than 20 components for large projects, and no less than 5 components for small projects.

If the concern is for risks affecting the schedule, breakdown the components by activities.  If the concern is risks affecting the cost of the project, breakdown the components by cost components, highlighting their expected costs. 

Once the project has been broken down into manageable components, the process of identifying the sources of risk (again, uncertainty) can be identified.

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