Identifying Project Risk 

Risk identification is a process which determines the types of risks that have potential impact on a project. The risk identification is an ongoing process and must be carried out throughout the project. Risk identification involves discovering the risk, documenting and communicating the hazard before it manifests as a problem in the system. 

Project undertaken may involve both internal and external risks. Internal risks, such as staff assignments and cost estimates are usually controlled by the project team. External risks, such as market shifts and government actions are beyond the control of project team. The risk identification process must address both internal and external risks. 

The element of suffering from a harm or loss is always a point of consideration while evaluating the risk. In the perspective of the project, risk identification is crucial to identify the positive effects as well as the negative effects. Risk identification hence helps to pinpoint the cause and effects of a process and specifically how negative outcomes should be controlled. Risk management involves participation of all stakeholders. It is characterised by strong leadership that supports a free and open discussion of risks. The  sources (inputs) of risks should be gathered comprehensively and could be identified from the following sources: 

1. Project management plan: This gives a succinct understanding of the project's scope, mission, schedule, cost, work breakdown structure (which explains the individual tasks) and the quality criterion of the project. 
2. Risk management plan: This gives a snapshot of all the participants (the roles and responsibilities of the person handling the risk), the funds allocated for risk management (budget provision), the time duration for carrying the risk management activities (schedule), the risks which have occurred or identified in similar such projects and the categories of risk identified. 
3. Project scope statement: This details the project boundaries and the assumptions. It is crucial to know the boundaries in order to alleviate the issue of creeping of scope. Assumptions are analysed to evaluate the extent of accuracy, consistency or completeness of the project. 
4. Organisational assets:  This includes historical information of lessons learnt from previous similar projects, the internal environmental factors that include the organisation's risk culture, structure, infrastructure, available resources, and the databases and also includes the project management software used.   

Risk identification helps you to smoothen the project's successful execution.  You must be able to detect the risks that project poses in order to handle those risks and control it. The identification of the risks can be done by following the below steps. 

Step 1:  Identifying the right project manager for the risk management task forms the first step. The project manager is the chief anchor of any project. The person must be capable of handling the entire project and must be aware of all possible risks. The choice of the project manager should be based on not just eligibility but also the person's availability (dedicated time to be allotted) to handle the task.  

Step 2: Analyse the scope for the project in terms of risk, which includes short terms tasks as well as the long terms tasks. As each task gives its own  set of  risks, an appropriate plan has to be made in order to evaluate all possible risks involved in the project. Generate a plan to identify the number of people it will take to handle a risk and the financial issues that might occur as well as identify the changes that have to be made to complete the project. 

Step 3:  Examine if the project risk will bring any impact on the general business of the company or will cause loss of resources to the project. Identify if the project will bring any change in the existing office policy or will result in an extra training for its people, which will cost more money to the company. 

Step 4: Budget can be considered as the road map to identify any financial risks for the project. You will need to prepare a complete budget before evaluating the financial impact of the project. Before beginning a project, take an account of the hours and the resource necessary to complete this project, which will provide a rough idea whether the project is worth doing or not. If the financial risk is found to be high, then you can just refuse the project. 

Step 5: Identify the risk involved in the structural aspect of the project, which can be made by examining the risks generated by working with vendors and suppliers. You can also identify the risk by distributing the tasks among your employees and examining the impact on the business.