Risk category is a grouping of risks based on their severity, likelihood, and potential impact on the project. Risk categories are typically used to prioritize risks and develop mitigation plans.
The following are common risk categories:
1. Strategic risks: These risks are related to the overall goals and objectives of the project. They can have a significant impact on the project's success and may be difficult to mitigate.
2. Operational risks: These risks are related to the day-to-day operations of the project. They can cause delays, cost overruns, or quality issues.
3. Financial risks: These risks are related to the financial aspects of the project. They can include things like budget shortfalls, currency fluctuations, or interest rate changes.
4. Compliance risks: These risks are related to the project's compliance with laws, regulations, and standards. They can include things like environmental violations, health and safety issues, or data breaches.
5. Reputational risks: These risks are related to the project's impact on the reputation of the organization. They can include things like negative publicity, customer complaints, or lawsuits.
6. Stakeholder risks: These risks are related to the expectations of stakeholders in the project. They can include things like scope creep, changing priorities, or conflicts of interest.
The assignment of risk categories is typically done by the project manager in conjunction with the project team. The risk category will help the project manager to determine the level of effort and resources that should be allocated to mitigate the risk.
Example of Risk Categories
Here are some examples of risks and their corresponding risk categories:
- Strategic risk: The project is not aligned with the organization's strategic goals.
- Operational risk: The project team does not have the necessary skills and experience to complete the project.
- Financial risk: The project is over budget and behind schedule.
- Compliance risk: The project is not in compliance with environmental regulations.
- Reputational risk: The project has been negatively publicized due to safety violations.
- Stakeholder risk: The project stakeholder's expectations are not being met.