Visual tools for Risk Management Process
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This document outlines various visual risk management techniques to identify and mitigate risks throughout the project lifecycle. Techniques include decision trees, influence diagrams, SWOT analysis, fishbone diagrams, process maps, and others to evaluate and prioritize risks based on their impact. It emphasizes the importance of early risk identification and provides structured methods for analyzing and planning responses to risks.
Visual tools for Risk Management Process
- 4. The best way to reduce the negative impact risks may have on your business is to incorporate risk management techniques into your business structure. This is a guide of visual risk management techniques that you can use during each stage of your risk management strategy. The Visual Risk Management Techniques • Help to identify projects that might be headed toward trouble and apply solutions • Help to prepare for unexpected threats beforehand • Help to provide enough data to make better decisions regarding projects/ events • Help to improve communication between stakeholders and project teams • Help teams stay more focused on the key outcomes
- 5. The risk management process begins with identifying risks in advance once you have set the goal. Identifying risks should be done early in a project and shouldn’t be done in the middle of or during a project, as it may be too late. Identifying risks can be done in 2 ways; • By identifying root causes and the impact they may have • By identifying the essential functions the company must perform to reach a goal and identifying how they can fail Identify Risks
- 6. Decision trees are used to make decisions when you are faced with multiple options. It allows you to assess the values of outcomes and possibilities of achieving them. This, in turn, helps make a better decision. Identify Risks Decision Tree Diagram
- 7. Step 1: Identify decisions and prepare a decision tree diagram based on decisions, costs, and rewards of uncertain options available to you. Step 2: Figure out the probability of a risk occurring and assign it Step 3: In this step you have to identify the monetary value of the risk, or in other words how much it would cost you if the risk is to occur Step 4: Calculate the Expected Monetary Value (EMV) of each decision path by multiplying probability and impact How to use Decision Tree Diagram
- 8. Decision Tree Analysis Template
- 10. Decision Tree Diagram With 6 Outcomes
- 11. An influence diagram is used to represent the summary of information of a decision tree. It shows variables that are known and unknown when making a decision and the relationships that exist among them. Identify Risks Influence Diagram
- 12. Step 1: Identify the decisions to be made to reach your objective Step 2: Consider the risks and performance factors that may have an influence on achieving your objective. Step 3: Recognize secondary factors that affect uncertainty associated with the performance factors. Step 4: Identify second-order risk factors that can influence secondary factors. How to use Influence Diagram Step 5: Continue to figure out what factors influence uncertainty until all key risks are identified.
- 13. Influence Diagram for Risk Management
- 14. Whether you are planning a new project or developing a new process, a SWOT Analysis can help you get insight into any risks that may occur. It helps you identify the Strengths, Weaknesses, Threats and Opportunities associated with the event. Identify Risks SWOT Analysis
- 15. Step 1: The first step is to list down your strengths. Knowing these will help you to be more confident. Step 2: The second step is to identify your weaknesses. Identifying weaknesses is the best way to improve them. Step 3: Opportunities come in different shapes and forms. Sometimes opportunities past by you without you even noticing them. Step 4: When doing a personal SWOT analysis you need to think of yourself as a company or a product and assess yourself against others. How to use SWOT Analysis
- 16. SWOT Analysis of Tourism Industry
- 19. Also known as the Ishikawa diagram and the cause and effect diagram, the fishbone diagram is used to break apart a problem and identify the root causes behind it. It works backward as it helps identify the causes of a certain effect. Identify Risks Fishbone Diagram
- 20. Fishbone / Ishikawa Diagram Template
- 21. Fishbone / Ishikawa Diagram Template
- 22. Fishbone / Ishikawa Diagram Template
- 23. Process maps help visualize the major steps and relationships between them in a process. By having the people who actually perform it outline the process using a process map, you can check for its accuracy. This also helps identify bottlenecks and blockers in advance. Identify Risks Process Maps
- 24. Step 1: Identify the team you need to map – whether its a new process or a process being redesigned Step 2: Bring together everyone who is involved in performing/ developing the process and brainstorm all information related to the process, such as inputs, outputs etc. Step 3: Take the steps you identified and put them in a sequential order Step 4: Draw a map that shows the current state of the process How to use Process Maps Step 5: Identify the bottlenecks and flaws in your process
- 25. Process Map for Risk Management Template
- 26. Once you have identified the risks, the next step is to assess the risks to see what kind of an impact they have on your business and current projects. By correctly analyzing the risks, you will be able to prioritize as to which risk has the highest impact on your business. Analyzing risks can be done in two ways • Qualitative risk analysis – here the risks are analyzed based on the likelihood of them occurring and the impact they may have on projects, business etc. • Quantitative risk analysis – quantifies the possible outcomes and evaluate the probability of achieving objects Analyze the Identified Risk
- 27. This is a tool that can be used to do a qualitative risk assessment. It helps to evaluate the relative impact (high or low) of a risk and the probability of its occurrence (high or low). Analyze the Identified Risk Risk Probability and Impact Matrix
- 28. Risk Probability and Impact Matrix Template
- 29. Pareto diagrams are a great way to identify which problems should be prioritized based on the cumulative effect it has on a system. While the length of the bars represents the frequency or cost (time or money), the bars are arranged with the longest bars to the right and shortest bars to the right. This way it depicts which situation is the most significant. Analyze the Identified Risk Pareto Chart
- 30. Step 1: Identify the categories you want to use to group the items, and the measurements (i.e. frequency, cost, time etc.) Step 2: Decide the period of time (an hour, week or day etc.) you want the Pareto chart to cover Step 3: Collect the data along with the category and subtotal the measurements for each category Step 4: Determine the right scale for the measurements and mark the scale on the left side of the chart How to use Pareto Chart Step 5: Label bars for each category, placing the tallest at the far left Step 6: Calculate the percentage for each category Step 7: Calculate and draw cumulative sums
- 31. Risk Probability and Impact Matrix Template
- 32. The fault tree analysis helps to identify the probabilities of various outcomes from given faults and failures. The fault tree analysis helps to identify the likelihood of an event occurring by visualizing a certain event at a top and the conditions causing that event. Analyze the Identified Risk Fault Tree Analysis
- 33. Step 1: Identify the fault/ failure that should be analyzed Step 2: List down the immediate or direct causes of the fault. Thoroughly examine each step until the root causes are analyzed Step 3: Once you apply the data to the fault tree, use it to do the evaluation How to use Pareto Chart
- 34. Fault Tree Analysis Diagram Template
- 35. In the planning phase of the risk management cycle, you need to pay attention to mitigating risks by finding solutions and controlling them. Starting from the risks that have the most severe impact on your projects or organization, find out how to minimize their effect. Planning to Avoid Future Risks
- 36. Futures wheel is a tool that you can use to identify direct and indirect results of a certain trend, event or decision. Planning to Avoid Future Risks Futures Wheel Diagram
- 37. Step 1: Identify the change. This could be a problem or a potential risk. Step 2: Brainstorm possible consequences of the trend. Step 3: Brainstorm the secondary or “second-order” consequences related to the “first-order” consequences you identified earlier. You can continue to expand the diagram by adding several layers. Step 4: Calculate the Expected Monetary Value (EMV) of each decision path by multiplying probability and impact How to use Futures Wheel Diagram Step 5: Once the futures wheel is complete you can get an overview of the direct and indirect consequences of the change you want to implement. Step 6: Take the negative consequences and identify possible actions you can take to control them.
- 39. The process decision program chart (PDPC) help you look into what might go wrong in a plan that is under development. You can use the chart to alter your plan in order to prevent the problem from occurring and to prepare a contingency plan to mitigate the risk. Planning to Avoid Future Risks Process Decision Program Chart
- 40. Step 1: Create a tree diagram of the plan, listing the objectives, main activities and the tasks that should be completed under each activity. Step 2: Take the tasks on the third level and brainstorm what could go wrong Step 3: If the consequences of the problems identified earlier are insignificant leave them out. Add the significant problems related to each task on the tree diagram as a fourth level. Step 4: Come up with countermeasures for each problem, and add them as a fifth level to the diagram How to use Process Decision Program Chart Step 5: Consider how practical each countermeasure is in terms of time, resources, cost etc. You can use an X to mark the impractical solution and an O to mark those that are practical.
- 41. Process Decision Program Chart – PDPC Template
- 42. Risk reward analysis is a tool you can use to evaluate the risk and reward profile of different options. Planning to Avoid Future Risks Risk-Reward Analysis
- 43. Step 1: List down the options and possible risks related to them Step 2: Plot the risks and rewards on the risk-reward analysis chart Step 3: While some options may have a positive risk-reward profile, take time to see whether you should spend time on mitigating risks of other options as well Step 4: Compare each option against one another to identify the best option for you How to use Risk-Reward Analysis
- 44. Risk – Reward Analysis Template
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