How to get comparable risk estimates

Professor Kalle Kähkönen
Tampere University of Technology, Finland:

My earlier discussion under the title “Riskiness as a viewpoint for categorizing projects” pointed out the significance of defining and understanding the overall risk level of project, and how this forms a starting point for categorizing projects, which is necessary when comparing and contrasting different project options.  Naturally, this is one of the key tasks of project portfolio management.
Credibility of the overall risk estimates is essential, but it can be difficult to achieve. The focused and measured comparison of risk estimates is one of the key aspects behind this credibility. Particularly, risk estimates of projects of interest (typically prepared by a variety of people) can be challenging when targeting comparable estimates. It is a well-known fact the individuals can have clearly different understandings of risks, in terms of qualities and resultant priorities. This makes preparation of comparable estimates a challenging task. Therefore, the methodological soundness is vital in the preparation of overall risk estimates.
However, results from various psychometric studies are encouraging and helpful in this situation. These results show that cognitive structuring of risk, using qualitative terming, is rather similar across nations and irrespective of cultural background. Therefore, the use of carefully selected qualitative terms as a basis for risk analyses can result in risk estimates that are sufficiently comparable with one another.
The risk analysis approach of Thinking Portfolio® Risk Analysis has been developed according to the principles explained above. The terms explaining the severity of impact and risk likelihood are each composed of six qualitative ratings.  Basically, this approach has shown its potential and gained merits in numerous cases and earlier applications.
In addition to the comparability aspect, the credibility of overall risk estimates includes additional aspects, as well. These will be covered in my upcoming discussions.
Risk Map

Figure:  Thinking Portfolio® Risk Analysis tool uses of qualitative terming as a basis for targeting comparable estimates

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