Why Hazards and risk are not the same on projects
There is an important difference:
Project risk management presents many challenges to project teams. Two of them are understanding (across a broad enough range of people) and application. I.e. getting it done early enough in the project when you are always very busy, so that the outputs of risk management have a positive impact on the project.
In relation to understanding, there are many discussions that you can see around the Web on this topic, which demonstrate levels of understanding are not always where we might like them to be. One such discussion is ‘hazards’ and ’risks’ – are they the same or are they different and if so how and why? This is what this post will attempt to answer. Please feel free to add your comments (or even provide real examples) below.
This is really key:
On projects, risk is any kind of (significant) event, that should it occur, will have a negative impact on the project objectives ( we classify opportunities differently here is why ). There are a number of very important words here, and none more so than ‘should it occur’. In other words, we are saying there is uncertainty associated with the event, which right now we cannot predict in absolute terms, but we may try to quantify or estimate (e.g. 1 in 10 chance of happening etc, perhaps by using historical data).
and this is a ‘hazard’:
A hazard, however, should be something of fact, something we know about. Think of a journey on a road – it may carry several hazards (a ford over a river for example), but those hazards, in themselves are not risks. There is no uncertainty about whether the ford to cross the river exists or not, but there may be risk associated with using it. For example, there could be risk relating to using it at the specific time we need to cross it. An untimely storm “may make the ford unusable or highly dangerous”. That could be a real example of risk in relation to our journey (the project), but in normal conditions, the hazard may not present any significant risk at all. So hazards exist all around us sometimes, and they may or may not give rise to risk, in relation to our particular project.
Purely as an item in itself (with no more information other than it exists), the existence of a hazard and no more is not a great item in a risk register.