Strength, Weakness, Opportunity and Threat (Shortly SWOT) analysis is an important technique in risk identification. Let me repeat the definition of Project Risk before getting into this topic.
Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective.
So, uncertainty is the one which makes risk management more interesting than any other thing in projects. Identifying, analyzing, monitoring and responding Project risks is really a challenging. Risk identification should include finding both positive and negative factors affecting the project.
What is SWOT Analysis?
* SWOT analysis is mainly used as strategic planning tool for business venture or project
* SWOT analysis is usually performed using brainstorming
* SWOT analysis should be performed with definite goal or end result or objective. Otherwise it is not useful
* SWOT analysis is more subjective and verification is tedious.
* In SWOT analysis, as Strengths & Opportunities are positive factors, Weaknesses & Threats form negative factors
* SWOT analyzes following two factors:
* Internal factors – The strengths and weaknesses internal to the organization
* External factors – The opportunities and threats presented by the external environment
* Simple explanation for Strengths, Weaknesses, Opportunities & Threats are:
* Strengths: internal organization factors that are helpful to achieving the project objective
* Weaknesses: internal organization factors that are harmful to achieving the project objective
* Opportunities: external conditions that are favorable to achieve the project objective
* Threats: external conditions that are unfavorable to achieve the project objective
* In SWOT analysis, first internal factors (Strengths and Weaknesses) are identified then any opportunities for the project that arise from organizational strengths & threats arising from organizational weaknesses need to be identified
* SWOT analysis also examines the extent strengths can counterbalance threats and opportunities to overcome weakness
* More than this, SWOT Analysis can be used for individuals personal plan or for a small activity/event (like conducting a conference) too
1. PMBOK® Guide 3rd Edition – Page # 8