Analysing and assessing potential risks

Analysing risks

There are many types of potential risks that could impact on a project. Analysing what type of risk it is (physical or financial) and what it involves (people or events) can help you plan strategies or procedures for dealing with them. You could have physical risks involving people or events, or financial risks involving people or events (or both). You'll mostly likely use different strategies for addressing each type of risks so it's important to understand the nature of the risks you are facing before planning with how to deal with them.

types of risk diagram

You'll also need to identify who could be affected by each risk, as this will help you decide which risk management strategies are most suitable for dealing with them. Parties who could be impacted by potential risks include:

  • young people.

  • youth workers.

  • the youth work organisation.

  • others.

"We have a set of risk management forms we have to fill in and give to our project coordinator who checks through them and makes sure we have thought of everything!"

Millie photo
case study icon

This case study analyses an example of a risk that could impact Litia's project. It identifies the type of risk and what it involves, the specific cause of the risk and its potential impact on the project.

Litia applies for and receives a grant of $2000 from the local council to run art workshops for the art expo. However, her organisation's van has blown a head gasket and so they spend this money on getting it repaired.

This scenario involves two main types of risk:

Type of risk

Specific cause of risk

Impact on project

financial risk involving people

improper allocation of funds

The council may demand the money is paid back as it was misspent.

financial risk involving an event

equipment breakdown

Without this money, there are no resources for the art workshops. The young people attending the workshops are not able to produce any paintings on canvas or make carvings. The art expo could be cancelled.

Risk management strategies that could have prevented or minimised the risks in this case study include:

  • making sure that everyone clearly understands what funding can and cannot be spent on.

  • speaking to funders (in this case, the local council) before spending money on anything other than what it was allocated for.

  • ensuring the van receives regular services and budget for repairs in advance.

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Talk to your project coordinator about how you analyse project-related risks in your organisation.

Make sure you are familiar with any processes, forms or documents you may need to complete when planning a project.

Include copies of any risk management strategies, forms or documents relating to your project in your portfolio.

Levels of risk

Once you've identified and analysed the potential risks that could impact on your project, you'll need to decide whether it's worth going ahead with the project as planned. There may be several potential risks that could affect the project, but the level of risk is so low for each that the benefits of the project outweigh these risks.

By comparing the benefits and risks of a project, you can decide whether the level of risk is acceptable or unacceptable. It may be that just one part of the project involves unacceptable risk and this could be resolved by cancelling that particular activity or making alternative plans. However, if there are too many unacceptable risks, or risks that can't be managed effectively, it may be better to cancel the project or postpone it until you've come up with another plan. These decisions are usually made in consultation with key stakeholders, for example, your youth work organisation.

Your project coordinator might compare the benefits and risks by completing a table like this:

Benefits Risks

                                                

                                                
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Talk to your project coordinator about how they compared the benefits and risks for the project you are working on.

  • How did they decide that the benefits of the project outweighed the potential risks?

  • Which risks were identified as acceptable because they would be outweighed by benefits of the project?

  • Were any risks identified as unacceptable? If so, what? What was done about them? For example, did your project coordinator plan another activity, change a venue, hire extra safety equipment and so on?

  • Which stakeholders did your project coordinator need to consult with before deciding whether the risks for this project were acceptable or unacceptable?

Record your responses in any way you choose and add them to your portfolio.

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Download and print a copy of the information on this page to refer to and discuss.

Analysing and assessing potential risks handout - Word document [722 KB]

Last modified: Tuesday, 24 September 2013, 9:12 AM