In the third part of our risk management series, we present the risk catalog. The risk catalog serves as a good basis for conducting a risk analysis and can also be used as an early warning system.
Risk Management (3) - The Risk CatalogLinh Tran, Tuesday 07 December 2021 | Reading time: 4 min.
Introduction: The risk catalog
The risk catalog - also called risk inventory - can serve as a basis for a risk analysis or the FMEA method. This method also offers many advantages when used on its own.
A risk catalog represents a structured compilation of potential project risk events.
In addition, you can also enter preventative or reactive measures for risk avoidance in the risk catalog. To ensure that you can use the risk catalog effectively in your day-to-day project work, it should meet two basic requirements:
- Simple and easy to use for the entire project team
- Visual presentation of stakeholder information
Advantages and disadvantages of a risk catalog
With the help of a risk catalog, subsequent risk analyses can be carried out much more quickly, since you already have a list of possible risks and only need to evaluate them using a specific scheme. In addition, creating a risk catalog serves as an early warning system, as risks are more likely to be identified in time. Once you have introduced the risk catalog as a standard method in all projects and it has been applied across several projects, the risk of an identical or similar loss event occurring in successive projects decreases.
Nevertheless, the benefits of the risk catalog are also limited. When using this method, there is a risk that your team will think that risks not included in it won't occur. As a result, the team may underestimate new risks or not notice them at all. Here it is important to raise your team's awareness of the limits of the risk catalog method and make it clear that new risks can always emerge.
Structure of a risk catalog
The layout of the risk catalog should include at least the following columns: Risk number, category, designation, description, assessment and measures. You can adapt this presentation to your individual needs at any time and, for example, add further columns. For your orientation, here is an example of a risk catalog:
- No.: Sequential numbering of the risks
- Risk category: Define different categories to keep an overview in case of a very extensive risk catalog. (Ex.: Technology, Market, Resources)
- Risk designation: Short and concise designation of the risk (Ex.: Delivery delay at supplier X)
- Risk description: Give an overview of the risk and, if possible, the potential consequences.
- Risk assessment: Define in advance different characteristics (e.g. low, medium, high) for the assessment of the risks and perform an initial assessment of the extent of the risk on the basis of these.
- Measures: Define preventative or reactive measures here that you will implement to prevent the risk or reduce the damage.
Furthermore, it is possible to structure the risk catalog according to the correct scheme for the methodology used in the risk analysis. For this purpose, orient yourself on the explanations on risk analysis according to FMEA or other risk analysis methods.
Read the other articles of the risk management series:
(Text by: Kathrin Jungwirth, Translation by: Linh Tran)