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Hi,
According to many risks can either have a negative outcome or a positive outcome. So if a risk has a positive outcome why is it considered as a risk and not as an opportunity? I realize that positive thinking says that look at all the risks as opportunities. But doing to defeats the following two purpose
1) It is not objective
2) Does not clearly distinguish between risks and opportunities.
So the question is why are risks not limited to only those items or events which have a negative impact on the project? Why not segregate and have two different lists one for risks and the other for opportunities? A risk may turn into an opportunity and vice versa, but that should lead the item to be reclassified as either an opportunity or risk respectively.
Can you please shed some light on this?
_____________________________
Regards
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Risk can be regarded as the obverse of Opportunity. As such, they can be dealt with similarly.
If you have a risk of a potential 10 day delay on one activity, you can also have the Opportunity of a ten day saving (on another activity) if you had used a duration that turns out to be longer than you may need.
TRA (time risk allowance) added to durations is one way of building in some potential opportunity for time savings. My preference on a construction project is to add 15% to the durations that are calculated using production rates.
Thus, I am building in a small opportunity for time savings on every activity.
Cheers
Hello AV,
People do projects for people. By extension, one or more people might collaborate together in the result of an outcome that is targeted to another person or another group of people.
Regarding the classification of risk within practices they can be classified to whichever methodology suits the person: the simpliest examples would be a SWOT (for an organisation / INTERNAL vs EXTERNAL) or SVOR (for a project / POSITIVE vs NEGATIVE).
Example of SVOR (retrieved from Mesly, Olivier (2017). Project feasibility – Tools for uncovering points of vulnerability. New York, NY:Taylor and Francis, CRC Press, 546 pages, 9 ISBN 9781498757911).
| Forces | Internal | Mathematical link | External |
|---|---|---|---|
| Positive | Total Forces | Total Forces given constraints = Infrastructures / Opportunities | Opportunities |
| Mathematical link | Vulnerabilities given constraints = 1 / Total Forces | constant k | Opportunities given constraints = 1 / Risks |
| Negative | Vulnerabilities | Risks given constraints = k / Vulnerabilities | Risks |
In different disciplines, risks and opportunities are the most volatile components in an analysis.
In projects, many variables are highly volatile and risks and opportunities grow in volatility exponentially.
From a practical and professional point of view, in contracts, it is a generality to classify them exclusively in the risk section. In their 'volatile' nature we attempt to integrate risks and opportunities within plans, projects and contracts.
In the conditions of being ethical and professional, it is accepted to classify them as 'risks' to present the existance of those 'volatile events' either they are positive or negative. The 'positive' or 'negative' judgement would come from the audience that can derive from the different people in the project (or contract).
Not everybody perceives 'positive' and 'negative' impacts with the same reception. It is better to classify them as risks from a contracting, operational and financial point of view AND/OR adapt once infront of a certain audience.
I hope this helps,
AA
Email: PPadmin@planningplanet.com
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