Risk Categories

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Risk management is an essential activity of project management. It is important to classify risks into appropriate categories. Risks can be classified into following 13 categories:

1. Operational Risk: Risks of loss due to improper process implementation, failed system or some external events risks. Examples can be Failure to address priority conflicts, Insufficient resources or No proper subject training etc.

2. Schedule Risk: Project schedule get slip when project tasks and schedule release risks are not addressed properly. Schedule risks mainly affect on project and finally on company economy and may lead to project failure

3. Budget Risk: Wrong budget estimation or Project scope expansion leads to Budget / Cost Risk.  This risk may lead to either a delay in the delivery of the project or sometimes even an incomplete closure of the project.

4. Business Risk: Non-availability of contracts or purchase order at the start of the project or delay in receiving proper inputs from the customer or business analyst may lead to business risks.

5. Technical Environment Risk: These are the risks related to the environment under which both the client and the customer work. For example, constantly changing development or production  or testing environment can lead to this risk.

6. Information Security Risk: The risks related to the security of information like confidentiality or integrity of customer’s personal / business data. The Access rights / privileges failure will lead to leakage of confidential data.

7. Programmatic Risks: The external risks beyond the operational limits. These are outside the control of the program. These external events can be Running out of fund or Changing customer product strategy and priority or Government rule changes etc.

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8. Infrastructure Risk: Improper planning of infrastructure / resources may lead to risks related to slow network connectivity or complete failure of connectivity at both the client and the customer sites. So, it is important to do proper planning of infrastructure for the efficient development of a project.

9. Quality and Process Risk: This risk occures due to

  1. Incorrect application of process tailoring and deviation guidelines
  2. New employees allocated to the project not trained in the quality processes and procedures adopted by the organization

10. Resource Risk: This risk depends on factors like Schedule, Staff, Budget and Facilities. Improper management of any of these factors leads to resource risk.

11. Supplier Risk: This type of risk may occurs when some third party supplier is involved in the development of the project. This risk occurs due to the uncertain or inadequate capability of supplier.

12. Technology Risk: It is related to the complete change in technology or introduction of a new technology.

13. Technical and Architectural Risk: These types of risks generally generally leads to failure of functionality and performance. It addresses the hardware and software tools & supporting equipments used in the project. The risk for this category may be due to — Capacity, Suitability, usability, Familiarity, Reliability, System Support and deliverability.

Apart from the above mentioned project risks, there is a common type of risk: Project Management Risk. This risk is related to following attributes:

  1. Project Planning
  2. Project Organization
  3. Management Experience & Program Interfaces
  4. Delay in getting approval for some of the work products from the customer or more requirement changes

Comments


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  1. April 22nd, 2009 at 04:44 | #1

    Hi, really thanks for providing a list of risks involved in a project. Your article is something useful like a college book ! Thanks once again.

  2. Renu
    August 20th, 2010 at 11:23 | #2

    Hey can you please tell these risk categories are mapped to which standards?
    are these related to IEEE standards?

  3. August 21st, 2010 at 08:49 | #3

    These are very general risk categories, not specific to any standard.

  4. Renu
    October 29th, 2010 at 09:02 | #4

    Can i get 2-3 examples of each type of risk mentioned in this article?

    Thanks in advance.

  5. sara
    May 9th, 2011 at 07:12 | #5

    Hi , tanks for your article .I am very use it but please get some special categories about industrial engineering .

  6. Jen
    January 27th, 2012 at 19:30 | #6

    Hi,

    I appreciate the effort that went into this, but it’s by no means an exhaustive list. I was looking for a category that included risks such as strikes, walkouts and loss of productivity due to decreased morale of job performers. I’m working on a project that will realize a 67% reduction in the workforce at one site, and moving the remaining workers to a new location that will force them to commute long distances. Personnel risks in this case are the top priority.

    Also, just some feedback – there were so many grammatical, spelling, punctuation, syntax and usage errors that it was hard to read. Also, some of the categories seem a little redundant; in fact most of the categories are redundant (for example, suppliers are generally considered to be resources when mapping out your resource requirements and WBS). I think they could be consolidated into five or six categories (project management, operational [which would include infrastructure, quality and process, and internal resources], external, etcetera, and amended with several missing categories, such as personnel / labor (what would you call this – would they be operational risks? Administrative risks? They could be legal risks if collective bargaining agreements are violated. I suppose they could all be categorized under the heading of political risks…no, I got it – behavioral risks).

    Not trying to be mean, just giving honest feedback. :) Needs revision…

    Thanks,
    Jen

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