Risk analysis is the activity of examining each identified risk to refine
the description of the risk, isolate the cause, determine the effects, aid in
setting risk mitigation priorities. It refines each risk in terms of its
likelihood, its consequence, and its relationship to other risk areas or
processes. Analysis begins with a detailed study of the risks that have
been identified. The objective is to gather enough information about
future risks to judge the root causes, the likelihood, and the consequences if
the risk occurs. The frequently used term “risk assessment” includes the
distinct activities of risk identification and risk analysis.
Risk analysis sequence of tasks include:
- Develop probability and consequence scales by allocating consequence
thresholds against the WBS or other breakout;
- Assign a probability of occurrence to each risk using the criteria
presented in Section
- Determine consequence in terms of performance (P), schedule (S), and/or
cost (C) impact using the criteria presented in Section 4.2; and
- Document the results in the program risk database.
Note: Risk analysis is a snapshot in time and may change
significantly during the program. Risk analyses must be periodically
re-accomplished to ensure the analysis remains current.
In a WBS approach, risks are identified, assessed, and tracked for
individual WBS elements at their respective levels (primarily for impact on
cost and schedule performance) and for their resulting effect on the overall
product. Since DoD programs are generally established around the WBS,
each product’s associated costs and schedule can be readily baselined, and its
risk consequence can be measured as a deviation against this baseline.
Taking the WBS to successively lower levels will help to assure all required
products are identified, along with allocations for cost and schedule
performance (as well as operational performance) goals.
Integration of performance, schedule, and cost analyses into a single
process provides a final product that starts with well-defined requirements,
builds upon a solid technical foundation, develops a realistic program
schedule, and documents the resources needed in the program cost
estimates. Program root cause identification and analysis integrates the
technical performance assessment, schedule assessment, and cost estimates
using established risk evaluation techniques. Each of these risk
categories (cost, schedule, performance) has activities of primary
responsibility, but is provided inputs and support from the other two risk
categories. This helps to keep the process integrated and to ensure the
consistency of the final product.
The following paragraphs provide relevant questions to ask in assessing
performance, schedule, and cost root causes.