Question

Briefly explain the three risks of a project? How to measure each risk?

Answer 1

Three Risks of a project

1. Scope Risk / Technology Risk

This risk includes changes in scope caused by the following factors:

Integration issues

Hardware & Software defects or updation

Change in dependencies

2. Scheduling Risk

There are a number of reasons why the project might not proceed in the way you scheduled. These include unexpected delays at an external vendor, natural factors, errors in estimation and delays in acquisition of parts. For instance, the test team cannot begin the work until the developers finish their milestone deliverables and a delay in those can cause cascading delays.

3. Resource Risk

This risk mainly arises from outsourcing and personnel related issues. A big project might involve dozens or even hundreds of employees and it is essential to manage the attrition issues and leaving of key personnel. Bringing in a new worker at a later stage in the project can significantly slow down the project

How to measure each risk?

Investment risk is the idea that an investment will not perform as expected, that its actual return will deviate from the expected return. Risk is measured by the amount of volatility, that is, the difference between actual returns and average (expected) returns. This difference is referred to as the standard deviation. Returns with a large standard deviation (showing the greatest variance from the average) have higher volatility and are the riskier investments.

Risk= Expected return - Actual return