What are Risk Factors?
Risk factors determine the likelihood (probability) and impact of a risk. Risk factors include both
- Positive risks and
- Negative risks.
Why Risk Factors are Important?
Facilitate complete risk evaluation, prioritize risks, and optimize resource allocation.
Helps to create effective mitigation (or) contingency plans
These characteristics assist project managers in determining which tasks to complete first and how urgently.
Impact
The severity of the risk’s impact on project objectives.
Probability
It Indicates the likelihood of a given danger occurring.
Can be assessed:
- Qualitatively: using scales (1–5) or labels (e.g., unlikely, likely).
- Quantitative methods include data analysis, statistics, and probability models.
Urgency
Indicates how quickly the risk may arise.
Early-stage hazards are more urgent, whereas late-stage dangers are less urgent.
Urgent threats require immediate attention, even if their chance is minimal.
Frequency
Indicates the frequency with which a risk (or comparable risks) has occurred or is anticipated to occur.
Describes the likelihood of a risk occurring.
Based on historical data & similar previous projects.
Common dangers may necessitate repeated contingency actions.
Understanding risk factors enables risk managers to transition from reactive to proactive risk management.
It is not enough to simply identify risks; you must also understand which ones to address first and how.
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