Project Risk Profiling

In today's society of multi-million dollar projects, risk seems to have become a second currency. If a new project is mooted, the first hurdle is how much will it cost (meaning what community resources are required) and the second question is, has there been a risk sign-off? Risk sign-off includes compliance with statute and common law provisions in addition to probity and other issues. These days, both money and the risk hurdles must be met for project to proceed.

Projects conceptually have an interesting risk profile. They assume an upside risk position for a project taking into consideration all the associated benefits. Risk assessments then generally focus on the issues that prevent the assumed upside benefits from being achieved. That is, it is a downside risk assessment process from an assumed upside risk position which can be represented by the diagram opposite. Some market or business risk techniques can also be laid over the top to tweak the upside benefits often in terms of cost savings.

Analysis can be done at any stage of a project's life cycle and can cause a variety of risk assessment techniques as shown in the diagram to the right.

One of the main advantages of project risk profiling is that it can be done very early on in the project concept stage to identify overaching issues and potential project 'show-stoppers'.

Project risk profiling typically uses a combination of top down and bottom up risk techniques and generally involves two main tasks: a high level vulnerability assessment and associated risk profiling as required, supported by specific detailed bottom up reviews. The overall concept can be described by the figure to the left.

The objective of such reviews is to identify early on any potential project 'show-stoppers' and ensure that all sensible practicable precautions are in place on the balance of the significance of the risk versus the effort required to reduce it.