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An active question was on this community that I previously added a response. However I wanted to ask a contrast based question that uses a graph to show where the two terms occur and see how a clear definition can be provided as to the relationship between these two terms (Risk, Opportunity) in Project Management.

Original Post is Here

Risk and Opportunity definitions

From what is defined in the context of project management, and encountered phrases in encountered articles I have seen before, stating that the explicit definition of a risk is not the polar graphical opposite of an opportunity.

So to understand, I wanted to ask what is it then, if they are not opposites, then are they related somehow.

Why is a risk not defined as a negative opportunity, and why is an opportunity not defined as a positive risk? The word differences make sense complete sense, but graphically they appear on opposite regions of the horizontal axis occurring at a moment in time.

To depict my understanding and comprehension, I drew a 6 region chart to segment the four quadrants.

Clearly opportunity occurs in the positive region of the future side of this 3 time partitioned graph (past, present, future).

So why wouldn't it make it the case that a opportunity is a positive risk and vice versa, or am I over looking different completely unrelated elements placed on a generic graph?

Project Elements and Corresponding Response

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  • It is my hope that a clear graphical or non graphical answer exists to clarify the exact difference and relationship to each other of these two terms.
    – Vahe
    Commented Sep 23, 2021 at 8:51
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    I'm not sure you will find the exact difference because I don't believe "exact" exists when it comes to risks and opportunities. Theoretically, an opportunity is a risk because risk is defined as something unexpected occurring that could impact the project. If it's a negative impact we call it risk, if it's a positive impact we call it opportunity. There is also risk associated to pursuing any opportunity, so opportunity does not replace risk, it can also increase it and coexist with it. It's complicated :). +1 for the question though.
    – Bogdan
    Commented Sep 23, 2021 at 9:04
  • If they are not different, how do they relate then?
    – Vahe
    Commented Sep 23, 2021 at 9:05
  • It seems we are measuring present states, and future impacts... that is all I see right now as the relationship, the present actual state (action item vs issue) and potential future impact (risk vs opportunity)
    – Vahe
    Commented Sep 23, 2021 at 9:06
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    They are both uncertain events that can impact the project objectives in some way. That is the common definition. It's like an abstract interface (uncertain and impactful) with two implementations (bad and good, or undesired and desired). At least that's how I see it.
    – Bogdan
    Commented Sep 23, 2021 at 9:08

3 Answers 3

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PMI defines risk as an uncertain event that could have a positive or negative impact to project objectives. Webster defines risk as a possibility of a loss and defines an opportunity as a good chance of advancement or progress. I opine that the PMI definition has caused confusion on what should be a rather simple concept. I favor what would be normally understood in plain language.

The two explanations that seem reasonable for PMI's definition is 1) if we apply no judgment on the impact, i.e., good or bad, favorable or unfavorable, and simply consider that objective was impacted, then a single term such as risk might be okay; and 2) different stakeholders within a project could perceive an impact differently, e.g., one stakeholder considers a cost overrun as unfavorable while the other considers it favorable.

In many ways, the same event can be constructed as both an opportunity and risk, simply by altering the language. We are at risk of grave bodily harm by crossing this frozen lake if the lake's ice is not thick enough. We have an opportunity of shaving hours of travel time if we are to cross this frozen lake instead of walking around it. Then both mitigation or enhancement strategies would include something around analyzing the thickness of the ice. In both cases, you took on the hazard and accepted both the inherent risks and opportunities of crossing that ice.

In practice, we manage risks. We hire a risk manager; we don't hire an opportunity manager, unless that's your sales and BD guy. We call our logs a risk log, not an opportunity log, unless that's your capture or pipeline log. I think at the end of the day we simply understand that an uncertain, future event can be either favorable or unfavorable, or even both depending on the perception of whoever is assessing and judging the impact.

As an aside, I would not use "issue" and "action item" as unhealthy or healthy in your graph. I would use "condition" to describe the present state of things, whether favorable or unfavorable.

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  • All is language. I did not know of and was not aware of differences that could exist in perception of impacts of the event by two observers of the same event. This is why having a clear language to communicate will help say accomplish development of an application or even communicating our perception of the impact of the event, and I believe will lead toward a (more) successful project outcome, the bottom line, an and benefit the organization in a financial manner for example.
    – Vahe
    Commented Sep 23, 2021 at 10:16
  • I think It makes more sense, as far as what we are capturing, grouping, measuring can be useful in making appropriate judgments, draw reasonable conclusions in terms of the representation of what we have in our assembled in our set to be measured (like risks, opportunities, or action items, issues) as in the graph presented in the question.
    – Vahe
    Commented Sep 23, 2021 at 10:25
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    @DavidEspina I think you are right. I have never seen risk described as a potential positive before except in the PMI. How strange. It is confusing. +1 for the risk manager and risk log explanation. Very clear.
    – Venture2099
    Commented Sep 23, 2021 at 12:42
  • @David, I wonder if perception is actually based on the observer and how to actually impacts them physically, and not perceptually like in the future impact...
    – Vahe
    Commented Sep 23, 2021 at 12:47
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Your scheme looks fine. There is no international regulatory body that determines whether your thoughts about risk are valid, and penalizes you for using non-standard terms.

The key question is, "Does it help you solve problems?" Will the diagram and associated definitions help you to deliver the project on time/on schedule/at an acceptable quality.

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  • Ultimately characterization would help to differentiate and separate action items from issues for example on an Action Item excel list, and not depict them vaguely in the projects, wouldn't that characterization provide for a clear communicable state of a project in terms of different elements presented in the graph, say like in dashboard, KPI measurement, status of action item, mitigation status of risk, or from the stand point of Business Intelligence application, and make the appropriate conclusion to decide at the what next action to take, financially, technically, sequentially in time.
    – Vahe
    Commented Sep 23, 2021 at 10:07
  • I am not looking for points on a test to get for right use or misuse of terms, but rather a way maybe to help me to see the differences, or if not, a written difference, which I started by depicting what I understand as of now, in a graphical format, as more so of a tool to develop an proper language for developing a not correct but well thought out PM or business intelligence application to communicate these four elements identified and recorded in say like a database and presented in graphical manner like a dashboard.
    – Vahe
    Commented Sep 23, 2021 at 10:10
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Here's a way of thinking of it:

Whenever we encounter a 'risk,' first of all, we can probably "see it coming." It's intrinsically something that we would prefer to avoid, and there's probably no "decision" about that.

When we see an 'opportunity,' we probably didn't see it coming – if we could have, we would have of course planned for it. Having now encountered it, we have to "decide."

Therefore – the two terms are really not "linked" at all.

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  • So, does the term linked imply two non intersecting set of possible event scenarios with associated non uniform likelihoods (i.e. probabilities - not all risk events in that event set that might occur have the same likelihood, and not all opportunities for an event that might occur would have the same likelihood of occurrence in each set)? Is is safe to say that is why they are not linked, or am I saying something else?
    – Vahe
    Commented Sep 23, 2021 at 19:54

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