Where am I going with this? My camping story may be a good example of what often happens to us in real life business world scenarios. As Project Managers we try to 'forecast' what is up ahead, resourcing needs, supply and demand adjustments or just upcoming employee holidays. 

In the most basic analysis of risk, one sets up a chart with four quadrants. The bottom 'X' axis is 'Likelihood expressed in percentage' and the 'Y' axis is the 'Impact'. Going over your list of known potential risk items, you peg each one onto this matrix. At the end, you review and prioritize starting from those that are in the top right hand corner, the 'High Probability, High Impact' quadrant items. Of course these are the ones that are of most importance to your business.

After this, without going too much into detail due to time constraints, you take your prioritized list and evaluate what specifically are the impacts to the business, and what is the mitigation steps that need to be performed to circumvent this risk or action plan in the event that it occurs.

 

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