Step 2: Identify the potential impact and estimate the Probability of Occurrence for each risk

The potential risk impact can be categorised under three elements:

  Effect of risk: The effect that each risk brings to the project, which can manifest itself as cost overruns, Timeline delays, and wrongly ascertained revenue, amongst others;

  Timing of risk: The period of the project the risk manifests itself in; and,

  Severity of risk: The magnitude of the risk on the project - often expressed as a percentage value; for instance, capital cost overrun risk could be expressed as being valued at 20% of the original value.

The measurable impact of the risk will also depend on its Probability of Occurrence. The PPP Project Team could identify the probability of risks by:

  Examining any encountered risks that occurred before in previously executed similar projects; and,

  Estimating the most likely probability depending on the key Stakeholders' similar experiences on other types of projects.

Some risks may be regarded as having low Probability of Occurrence, but their economic impacts may be considerably high. Hence, at this stage, it is crucial to analyse all risks, even those indicating lower Probability of Occurrence.