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Indy Risk School
Business Risk
During the risk management process, the project manager and team would also undertake a Business Risk analysis. Charette and others provide a comprehensive approach to the evaluation, impact and probability analysis of risk impact. However, for most projects, it would be sufficient to document the impact on the organization (and the team) of the failure of the project.
Typically, in projects, the following classes of business risk impact can be identified:
| financial - | the investment in the project is lost and benefits are not accrued; |
| strategic - | the organization's strategic plan is compromised; |
| technical - | key technology platforms are compromised; |
| legal - | the organization is exposed to legal procedures including litigation and prosecution; |
| political - | the organization is in violation of government requirements; |
| fraud - | the organization is exposed to fraud and security violations; and |
| image and reputation - | the organization faces loss of public image or reputation. |
Again, remembering Figure 2, the higher the risk of the project (as revealed by the project risk assessment process) the higher the probability that the project will fail and the organization will be exposed to the risk impact.
As in risk control, the key is for the team to undertake the impact analysis and ensure that the relevant senior management are aware of the impact and are prepared to invest in strategies to increase the probability of project success.