Step 5: Identifying assumptions and analysing risk factors

RBM - step 5

When you take a closer look at the results chain, you will probably see that the cause and effect relations between activities and outputs, between outputs and effects and between outputs and impact are conditional. Basically, if all holds well we can expect that we’ll get the results that we want at the end. This means that we (implicitly) make a number of assumptions. What does it mean ‘if all goes well’?

Project logic and assumptions in the logframe

RBM makes a distinction between assumptions, which are positive conditions, and risks that are negative factors. Both assumptions and risks can be internal or external factors. Internal factors are the things we have under control: the capacities of our staff, our management capacity, delegation of authority, etc. External factors are influences from the environment on our project.

There are different types of risks and assumptions:

  • Operational risks are linked to the activities, the availability of resources, logistical problems, etc.
  • Objectives risks and assumptions have a direct influence on whether we will be able to achieve our results.
  • Financial risks
  • Reputation risks

Risks can have varying degrees of impact on our project. The influence of some risks will be negligible, or else they may be a nuisance but nothing we can’t handle. In other cases they may have a severe influence on whether we will be able to realise our objectives. In the worst case scenario, we may be forced to stop the project altogether.

Another factor we have to assess is what the chance is realistically that a risk will materialise during the project. The combination of the impact that a risk might have and its likelihood helps us to assess the situation and take (preventive) action. If a risk has low impact and is not likely, it’s really not worth mentioning in your logframe. High impact risks with low likelihood still have to be monitored. And when a risk really threatens the project and is very likely, it’s probably not worth starting the project in the first place.

Merely identifying the risks is not enough: it’s also important to reflect on what you will do if or when the risk occurs:

  • Are you going to try to avoid the consequences or the risk altogether (for instance through disaster risk reduction)?
  • Are you able to deal with the consequences?
  • Will you be able to transfer the burden to someone else (an insurance company for instance)?
  • Or will you do your best to mitigate the consequence as much as possible?

 

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