Categorising risk is important in making sure the right people are consulted during a project lifecycle
Resource
The main goal of categorising risk is to avoid any unpleasant surprises. It also provides a systemic, structured and consistent approach to identifying the risks. It also provides better management focus in identifying a wide range of risks. It can help the risk assessment process by providing a framework to cooperate with stakeholders within a specific risk category.
The framework outlined here is the result of work carried out as part of ERIS at the Energy Systems Catapult.
Risk types
Business Risks – These risks remain entirely with the organisation, cannot be transferred by the organisation and include political and reputational risks.
Service Risks – These associated risks fall within the design, build, financing and operational phases of the project and may be shared with others from outside the organisation.
External Risks – These non-systemic risks affect everyone in society and are not connected directly with the proposal. They are inherently unpredictable and random in nature. They include technological disruption, legislation, general inflation and catastrophic risks.
High-level and detailed risk categories can be helpful to identify possible risks.
High-level risk categories
High-level categories are the main areas where risks can be found. Each of these areas can impact a project in a number of ways during design, delivery or operational stages. High-level risk categories are helpful when carrying out risk analysis with stakeholders. Participants are often much more knowledgeable in certain areas of risk than others, and this framework can help to ensure that all areas are considered and the right people are consulted.
| Summary | Type | Description |
| Technical | Service Risks External Risks |
What the local energy project needs to do, what it is and how it performs in its environment and with related systems. |
| Market | Service Risks External Risks |
Commercial arrangements for the local energy project that result in value being realised. |
| Social | Service Risks | People or groups involved in or impacted by a local energy project and its stakeholders, environment and related systems. |
| Policy | External Risks | Government interventions to support or constrain a local energy project and its stakeholders, environment and related systems. |
| Legal | External Risks | Law relating to a local energy project and its stakeholders, environment and related systems, including regulation. |
| Economic | Service Risks Business Risks |
Economic impact or constraints on a local energy project and its stakeholders, environment and related systems. |
| Environment | Service Risks | External effects associated with the development, production, utilisation, support and retirement of a local energy project and its stakeholders, environment and related systems. |
| Organisation | Service Risks Business Risks |
Organisation(s) delivering the project, including the supply chain. |
| Project | Service Risks Business Risks |
Delivery of local energy projects. |
| Schedule | Service Risks Business Risks |
Relating to timing or delay of the delivery of a local energy project due to internal and external factors. |
Detailed categories
The detailed categories are very useful in more detailed workshops and programme planning as the participants and programme managers can drill down to a deep level of detail depending on the scale and scope of the project.
| Economic | Commodities |
| Disposal income | |
| Exchange rates | |
| Growth | |
| Inflation | |
| Interest rates | |
| Taxation | |
| Environment | Climate |
| Damage | |
| Emissions | |
| Geographic location | |
| Natural resources | |
| Pollution | |
| Sustainability | |
| Terrorism | |
| Weather | |
| Legal | Compliance |
| Consumer rights | |
| Contracts | |
| Health & Safety | |
| IP | |
| Labour rights | |
| Land rights | |
| Law change | |
| Litigation costs | |
| Noncontractual rights | |
| Product safety | |
| Property rights | |
| Regulation | |
| Standards | |
| Market | Business Model |
| Competition | |
| Currency | |
| Financing | |
| Input Price | |
| Output Price | |
| Output Volume | |
| Revenue Stack | |
| Organisation | Cashflow |
| Costs | |
| Dependencies | |
| Experience | |
| Funding | |
| Governance | |
| Prioritisation | |
| Resources | |
| Return on Investment | |
| Policy | Fiscal |
| Incentives and subsidies | |
| Monetary | |
| Stability | |
| Trade | |
| Transparency | |
| Project | Communication |
| Controlling | |
| Estimating | |
| Planning | |
| Risks | Economic |
| Environment | |
| Legal | |
| Market | |
| Organisation | |
| Policy | |
| Project | |
| Schedule | |
| Social | |
| Technical | |
| Schedule | Acquisition |
| Cascade | |
| Technical phasing | |
| Social | Community |
| Consumer | |
| Demographics | |
| Employment | |
| Reputation | |
| Training | |
| Trends | |
| Technical | Complexity |
| Integration | |
| Interfaces | |
| Maturity | |
| Monitoring and measurement | |
| Performance | |
| Producibility | |
| Quality | |
| Reliability | |
| Requirements | |
| Resilience | |
| Technology | |
| Testability |
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