All projects and most investments involve risk of some sort, and a business case is strengthened immensely if it can be shown that the risks have been considered and convincing countermeasures have been devised. A risk assessment at this stage is not the same as the full risk analysis that should be performed during the detailed planning of the project; rather, we are looking for the main, or most serious, risks to achieving the objectives of the proposed solution(s).
Prior to conducting a risk assessment
Before completing a risk assessment, you should have identified your options, assessed the project feasibility and conducted a cost-benefit analysis (or measured the benefits), and conducted an impact analysis.
What is a risk assessment?
A risk assessment is where the user documents the potential risks that are identified for each option in the business case. This involves documenting the impact the risk is likely to have on the project, the probability of the risk occurring, suitable countermeasures and ownership.
Why use a risk assessment?
Change never comes without risk but a business case is strengthened when it considers suitable countermeasures to potential risks.
At this stage, you should document the major risks (the “project killers”) within the main body of the business case, with any remaining risks documented in an appendix. If senior management choose to go ahead with a particular option, a risk log should then be created to document all risks involved within that change or development project.
How do you document a risk assessment?
There are many ways to document a risk assessment, depending on the organisation, department or project. As stated before, a risk log at this stage is not necessary. A general structure covering the risk description, impact assessment, probability, countermeasures and ownership would be sufficient.
| Risk Description | Impact Assessment | Probability | Countermeasures (Avoid, Accept and Mitigate) | Ownership |
|---|---|---|---|---|
| Council budget cuts could have a knock-on effect on the project budget. | H | M | Mitigate: Assess how much of the project budget could be affected then take appropriate action. | Project Manager |
What happens next?
Completing a risk assessment takes you towards the final stages of the business case development, which involves making recommendations and doing an investment appraisal.