Subtitles of the Movie

In this movie we will cover risk categorization, a tool and technique of the qualitative risk analysis process. Imagine how effective your risk management efforts would be if you could pinpoint which areas of the project are the most affected by risk. Where is risk primarily coming from or what project phases or areas of the WBS, which stands for Work Breakdown Structure, carry the highest levels of risk? Risk categorization helps you determine this. The idea is to uncover these sources of risk or areas of risk concentration to develop effective risk responses. Dealing with a source or the sources of risk can have a greater level of effectiveness, perhaps with less effort or less funds spent. You can categorize risk by source, using the RBS. You can categorize them by the area of the project affected, by using the project's WBS, which decomposes the project's deliverables down to the work package level. I had also mentioned that you can also categorize risk by phase, which the PMBOK Guide mentions will identify the areas of the project that have a higher exposure to the effects of uncertainty. Let me give you a basic example using our substitute grass project that was introduced in the past two movies. Let's say that in examining the identified risk by source, you discover that several high risks relate to the equipment used to lay the grass. The company currently rents the machine used to press the substitute grass after it has been laid down, which raises several potential risks, such as the availability of the machine, the high cost of renting the machine, the quality of machine available at the time of rental and so forth. Based on the size of the project, it may be determined that purchasing a machine of high quality would result in the same cost as a rental of the machine and save money on future projects that will use the equipment as well as eliminate the risk that I mentioned a moment ago. We could certainly have dealt with the risks individually, such as arranging a relationship with the rental companies to reserve the machines in advance, but purchasing a machine deals with many of the risks at the same time. The point here is that you are making this connection between the identified risks. That covers risk categorization. Remember that this technique helps develop more effective risk responses by pinpointing where risk is coming from and also be familiar with how risks are categorized, which includes the RBS, WBS and project phases. And that concludes our overview of risk categorization, bringing this movie to a close.