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Risk Breakdown Structure (RBS)

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The Risk Breakdown Structure (RBS) is a hierarchical representation of identified risks, organized into categories and sub-categories based on their sources, nature, or areas of impact. The RBS provides a structured approach to risk management, as it helps project managers visualize the relationships between risks, identify potential root causes, and better understand the risk landscape. By creating an RBS, project managers can ensure that all relevant risks are taken into account, facilitating more comprehensive risk identification, analysis, planning, monitoring, and control. The RBS can also serve as a useful communication tool for stakeholders, as it aids in providing a clear and concise overview of the project's risk profile.

Guide to Risk Breakdown Structure (RBS) in Project Risk Analysis

The Risk Breakdown Structure (RBS) is a crucial tool in project risk analysis. Following the PMBOK Guide Seventh Edition, it becomes instrumental in dissecting and assessing different types of risks a project can encounter into various levels.

Why is RBS important?
RBS is important because it helps in early identification of risks, categorising them, and focusing on risk management efforts effectively. Further, using RBS also promotes a comprehensive understanding of risks and allows proactive control and mitigation strategies.

What is RBS?
RBS is a hierarchical representation of project risks, starting from an overall risk (at the top level) down to detailed risk categories and eventually to individual risks (at the bottom level).

How does RBS work?
RBS works by dividing and further subdividing overall project risks into respective categories, sub-categories and individual risks. The risk categories are based on various factors such as project phase, department, or type of risk.

Exam Tips: Answering Questions on Risk Breakdown Structure (RBS)

  • Understand the purpose of RBS and how it's used in project risk management.
  • Be familiar with the structure of an RBS, i.e., the top-level major risk categories and the subsequent division into sub-categories and individual risks.
  • Understand that risks in an RBS are not listed in any particular order of importance or impact.
  • Be mindful of scenarios where risks may fall into more than one category. In such cases, consider the overall context of the question to determine the most appropriate risk category.

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PMP - Project Risk Analysis Example Questions

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Question 1

A project has encountered a risk related to employee absenteeism impacting the project deadlines. As per the RBS, under which category should this risk be classified?

Correct Answer: Under Resource risks

The correct answer is 'Under Resource risks'. Employee absenteeism falls under resource risks because employees are considered a resource in project management. The other choices are not correct because: 'Under Schedule risks' is about timing, not resources, 'Under Technical risks' pertains to technical aspects such as programming, gears, tools etc., and 'Under Financial risks' is related to budget and costs, not employee attendance.

Question 2

After conducting a risk assessment for a factory automation project, you have identified a risk pertaining to potential accidents on site due to complicated machinery. As per the RBS, how should this risk be classified?

Correct Answer: Under Safety risks

Risks related to potential accidents on site due to complicated machinery would typically fall under 'Safety Risks' as per the Risk Breakdown Structure (RBS) in project management. The RBS is a hierarchical framework that helps to identify and categorize risks; safety risks in this context refer to potential hazards that could cause harm to people involved in the project - in this case, the possibility of accidents due to complex machinery. On the other hand, 'Resource Risks' would be more related to issues with the materials, time, people, or equipment needed for the project. 'Operational Risks' mainly involve risks related to the day-to-day operational aspects of the project, while 'Financial Risks' generally pertain to potential monetary losses in a project.

Question 3

A project manager is evaluating a potential risk that may impact the quality of the final product's software. According to the Risk Breakdown Structure (RBS), which risk category does this belong to?

Correct Answer: Technical risks

According to the Risk Breakdown Structure (RBS), risks impacting the quality of the final product's software fall under the category of 'Technical risks'. This category includes risks associated with the technology being used for product development, or risks related to the difficulty in achieving some technical development or specification, like the case in the question. The other categories are not suitable in this case: 'Project risks' typically refer to risks associated uniquely with the project management process, such as schedule, cost, or resources risks. 'Risk management process risks' refer to the effectiveness of the risk management approach itself, this is not related to the question at hand. Last, 'External risks' represent potential impacts from outside sources that could pose a threat to the project or product, for example natural disasters, which is also not the case in this question.

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