5th Edition PMBOK® Guide–Chapter 11: Identifying Risks through SWOT Analysis


1.   Introduction

Risk Management, which is covered in Chapter 11 of the 5th Edition PMBOK® Guide, has six project management processes, five of which are in the planning process group.    The first planning process creates the Risk Management Plan, which creates a framework within which all of the other risk management processes can take place.

The second planning process, 11.2 Identify Risks, is where the first step in risk management takes place.   Risks are identified, which are then in later processes analyzed and then managed with appropriate responses.    Since this process is one of the most complex of all risk management processes, there are many tools & techniques listed to help capture as many of the risks as possible in this process.

One of the tools is SWOT analysis, which stands for Strengths-Weaknesses-Opportunities-Threats.   It is a powerful tool for an organization to identify risks.

2.  Opportunities vs. Threats

There are two variables to consider in SWOT analysis, those variables “internal” vs. “external” to an organization, and those which are “positive” or “negative” with respect to their impact on the project’s constraints.    Let’s take the last of these two dichotomies first.

The definition according to the PMBOK® Guide of a “risk” is “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives.”   The technical definition of risk includes both positive or negative effects; in common usage, however, the word “risk” usually implies just the negative effects, with a word like “opportunity” covering something which might have a positive effect on a project.   That is why threats AND opportunities are part of the SWOT analysis, because they cover both the positive and negative effects on a project.

3.  Internal vs. external

Threats and opportunities are considered events or conditions that are outside the project that will affect something inside the project.   Those threats and opportunities can be from the organization itself or from outside the organization.    In either case, the strengths of an organization, the positive aspects of the organization, may be able to neutralize or at least mitigate some of the threats to a project.    For example, the more people trained in a crucial area of expertise, the less likely it is that the absence of a key person on a project will prevent that work from being done, because the other people trained in the area may be available to fill in for the absent person.

The weaknesses of an organization, however, are those factors within that organization which may exacerbate risks, or negate opportunities that come by way of the project.    So keeping track of the external threats and opportunities that a project may face vs. the internal strengths and weaknesses of the organization within which the project is done may help in understanding not just where the risks are, but how to create effective risk response strategies once those risks are identified.

4.  Usefulness of tool

At Experience Unlimited, a professional networking group devoted to those professionals who are looking for jobs, we ran an interview workshop in which one of the ways we asked for the participants to prepare for an interview was to do a SWOT analysis.    The threats and opportunities were those forces in the marketplace or otherwise external to the person which might impede or improve the chances of their being able to find a particular job in a particular industry at a particular company.

Then they need to catalogue those strengths and weaknesses that are internal to the person, i.e., those factors which would appear on a resume based on their job experience, which also might impede or improve the chances of their being able to get that particular job.

In my own case, the type of job I used to, litigation management, was something which, because of the changes in the marketplace, now in many cases requires a law degree.    For this reason, the threat that now existed in the marketplace to my getting the kind of job I used to have forced me to make a decision to find another line of work, which is how I decided to become a project manager.    Being a project manager played to my strengths which were, a track record of working in a company where I coordinated the activities of people from several functional areas of the organization, and a strong background in knowledge of foreign languages and cultures.    These strengths of my mine, I felt, would match the increasing opportunities in the marketplace for those who want to work for international companies.    Now, my background worked for, rather against, the opportunities that existed in the marketplace.    So the SWOT analysis was essential for my making a career decision, and so I can attest to its usefulness in analyzing both the threats and opportunities that exist not just for a person, but for an organization as well.

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