What Is the Difference Between Positive and Negative Risks?

Risks to many Project Managers strictly mean “bad news”, however, some risks can be positive, so what are the differences between positive and negative risks? Here’s a list highlighting those differences:

  • Negative risks are unwanted and potentially can cause serious problems and derail the project, positive risks, on the other hand, are opportunities and are desired by both the Project Manager and the stakeholders, and may positively affect the project, such as increasing the ROI or finishing the project ahead of time.
  • Known negative risks have to be managed and accounted for in the risk management plan, this is the same for positive risks. However, positive risks are managed in order to take advantage of them and “tame them”.

Examples of Negative Risks

  • The main programmer on the project quitting the job.
  • Lack of construction material (such as concrete) because of political issues (such as hostile relations between 2 bordering countries) in case of a construction project.

Examples of Positive Risks

  • Receiving much more than the expected number of subscribers on the launch date of the service (for example a new telecommunications service).
  • Finishing a part of the project way before schedule and creating a lot of slack, as other resources are not scheduled to work on the project until much later.
  • Note that positive risks can easily create negative risks, for example, in the case above where the telecom service gets a lot of subscribers on its launch date, then negative risks may possibly ensue, such as the inability of the switches to handle the load, the inability of the billing system to process all the calls, the clogging of the text messaging system, etc… These negative risks combined, can cause the whole service to fail, as people will be completely dissatisfied with the service. In short, positive risks are good but need to be accounted for and taken seriously.

    © 2010 Project Management Learning – Reproduction of this material is strictly prohibited without the written consent of Project Management Learning.

Leave a Comment




Formatting Your Comment

The following XHTML tags are available for use:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

URLs are automatically converted to hyperlinks.