Article Summary

Title: The Risk Breakdown Structure (RBS) as an Aid to Effective Risk Management Authors: Dr. David Hillson This article describes how to successfully manage risks of a project by using the Risk Breakdown Structure, or RBS. The RBS is a hierarchy of risks involved with the project. It is an aid for identifying, assessing, comparing, and reporting risk. Many companies think that by identifying their risks, they can understand and manage it. A long list of risks can be hard to structure and prioritize, so the RBS can be a more effective tool to breaking down the risks and helping the project manager focus his/her attention on certain risks. The RBS follows the basic pattern of the Work Breakdown Structure (WBS) and is defined as, A source-oriented grouping of project risks that organizes and defines the total risk exposure of the project. Each descending level represents an increasingly detailed definition of sources of risk to the project. The first step in using the RBS is to identify the risk, possibly by having a risk identification workshop or brainstorming session. The next step is risk assessment. Instead of simply counting the risks are in each RBS area, it is important to measure the severity of each risk. Using a risk score helps to break down the risks and determine which are the most major. When assessing risk, it is important to categorize them using the following information: Understand the type of risk exposure of the project. Depict the most significant sources of risk to the project. Reveal the causes of risk using an affinity analysis. Indicate areas of correlation/dependency of risks. Focus on high-risk areas for risk response development. Allow generic responses to be developed for the causes or groups of risk.

The next step in using the RBS is to create a comparison of projects or tenders. When working on multiple projects, you can use the common framework of the RBS to compare projects. It is much easier to use the RBS in this comparison instead of comparing unstructured lists of risks. The final steps are risk reporting or recapping and learning for future projects. By using the RBS, you can roll-up risk information on individual projects to a higher level for upper management. You can also drill down into further detail to capture actions taken by your team. The RBS can provide a common format across multiple projects for analyzing risk information. By creating a report of the project and RBS-based analysis, general risks can be recorded for future reference.