Project Risk Analysis

Will Six Sigma Be Relevant For The Future
  • Apart from the Lean Six Sigma team, there are external factors that may play a role in the successful execution of the project. These are calledProject risks.
  • The formal definition of risk is an event or occurrence that may negativelyimpactthe project.
  • Risks can be mitigated and even prevented. However, this requires a good amount of understanding of the risks and advance planning.
  • For this reason, the DMAIC methodology in Six Sigma has risk assessment as an inbuilt step. You cannot ignore it if you truly follow the DMAIC philosophy.
  • Project Risks are as follows
    - Stakeholder Risk: Arises from the fact that stakeholders may not have the inclination, or the capabilities required to execute the project. Stakeholders could be regulators, customers, suppliers, managers, customers, etc.
    - Technology Risk: Organization may not be in a position to acquire the technology as required by the project, or the current technology on which the project is being done might become absolute.
    - External Risk: The project execution might require help and support from external sources (vendors, customer). The organization may have very little ways to predict issues arising from external sources.
    - Execution Risk: The project also faces the risk of not receiving continued support from the organization either from the management or from the people who anticipate negative impact because of the project
    - The Project Risk Assessment needs to be completed in the Discovery or Define phase .
    - It is to ensure that people implementing the project have given a thought to what can possibly go wrong & identify a mitigation plan
  • Step by step to prepare the Project Risk Assessment Matrix:
    1. List down the Risks
    This is usually done in a brainstorming session. Participants are typically given a list that contains common categories of risks. The participants are then advised to think if they can foresee a risk in any category. This is done over and over again to ensure that the list is exhaustive.
    2. Rate for Probability and Impact
    The risks are rated on two parameters probability of occurring & impact of occurring. Scores are given to both the parameters & are then multiplied & arranged in descending order
    3. Classify the Risks
    The risks are classified into the following four categories
    4. Decide on Mitigation Planning
    Steps identified to mitigate risks of more than 25 (categories 2,1 & 3) either by reducing the Probability or Impact or both