When managing individual projects, performing a thorough risk analysis is standard practice. But what happens when those projects are part of a broader strategic initiative—a project portfolio? In these cases, risks must be assessed not only at the project level but also across the entire portfolio. This process is essential to ensure alignment with organizational goals, effective resource utilization, and strategic prioritization.
The Nature of Project Portfolios
A project portfolio is more than just a collection of individual projects. It represents a coordinated strategy to achieve broader organizational objectives. Projects within a portfolio may share common risks, response plans, and even resources. At the same time, the degree to which each project is exposed to those risks can vary significantly. As such, it’s important to evaluate risks at both the project and portfolio levels. To support this, many organizations rely on an enterprise risk register—a centralized catalog of known risks the organization faces. From this register, relevant risks can be assigned to specific projects, and in turn, to individual tasks and resources. This enables a more structured and proactive approach to risk management.
Why Perform Portfolio Risk Analysis?
To illustrate the importance of risk management in a portfolio context, let’s take an extreme yet insightful example: climbing Mount Everest.
At 8,848 meters (29,029 feet), Everest is one of the most dangerous undertakings in the world. As of March 2012, it had been summited 5,656 times—with 223 climbers losing their lives. That’s a fatality rate of 4%, making it one of the riskiest peacetime activities on Earth. Despite the danger, climbers willingly invest tens of thousands of dollars to be part of expeditions with uncertain outcomes.
But an Everest climb is not a single project—it’s a portfolio of interconnected initiatives.
The Portfolio Behind the Summit
A successful Everest expedition involves a wide array of smaller, individual projects:
- Logistics and Procurement: Acquiring equipment, food, and medical supplies; hiring guides and porters.
- Travel and Setup: Transporting people and gear from Kathmandu to Lukla, and then on foot to Base Camp.
- Acclimatization and Training: Spending time at increasing altitudes to adjust to the low oxygen levels.
- Camp Establishment: Setting up Camp I through Camp IV along the route.
- Summit Attempt: A high-risk final ascent from Camp IV to the peak, then a dangerous descent.
Each phase has its own goals, timeline, risks, and resources. Together, they form a tightly linked project portfolio, where failure in one component (e.g., supply chain delays or altitude sickness) can jeopardize the entire mission.
Shared and Unique Risks in the Portfolio
Some risks are shared across multiple projects in the Everest portfolio, while others are specific to individual phases. Here are some of the most critical risks:
- Cold Exposure and Frostbite: Particularly in the “death zone” above 8,000 meters, where extreme cold can lead to frostbite in minutes.
- Falls and Injuries: Hard-packed snow and treacherous terrain increase the risk of slips and falls, often with fatal consequences.
- Hypoxia (Altitude Sickness): Low atmospheric pressure makes oxygen use essential; mismanagement can quickly become life-threatening.
- Avalanches: Unpredictable and often fatal, especially in remote areas with limited rescue capabilities.
These risks don’t just affect safety—they impact cost, schedule, and overall success rates. A single risk event, like an avalanche or a logistics breakdown, can delay or cancel an expedition entirely.
Lessons for Project Portfolio Managers
The Everest analogy shows that a project portfolio isn’t just a theoretical construct—it’s a real-world necessity. Just as an expedition team must plan for shared risks, allocate resources strategically, and monitor conditions constantly, organizations must do the same when managing complex project portfolios. Using an enterprise risk register, organizations can assign and track risks across multiple projects, identify systemic vulnerabilities, and prioritize mitigation strategies. This not only increases the likelihood of individual project success but strengthens the resilience and performance of the entire portfolio. Whether you’re launching a new product line, overhauling your IT infrastructure, or preparing to summit the world’s highest peak, one truth holds: success depends on how well you manage your risks. Portfolio risk analysis is not a luxury—it’s a critical tool for making sure your strategic vision becomes a reality.
