|Joe Lukas kicking it off at PW&WCBA 2012|
"You have risk all around you. Risk can be good or bad." - Joseph Lukas, PMP, PE, CCE, Vice President, PMCentersUSA started our workshop at PW&WCBA this morning by discussing the nature of risk. What do creating "New Coke," driving a car, and investing capital have in common? All of these activities carry risk...or uncertainty.
Lukas pointed out that risks are not always bad, they can also be opportunities. Risk management can contain both planning for adverse effects, but it can also be a way to plan for positive opportunities. Start thinking of it not as "risk management" but "uncertainty management."
Why do risk management?
- Technology, personnel or even project requirements may change over time, and the likelihood of change increases the longer the duration of the project
- Risk management can help you be prepared for these changes
So what are some ways to identify risks?
Brainstorm with the team: you can even ask "what could make this project fail?"
Checklists based on prior projects (in addition to "scanning the horizon" for new risks)
Describe the risk in 3 parts: causes, risk events & impacts
Once you've identified risk causes, events and impacts you can then assign each risk a probability of occurring and an impact value. There may be some risks that you choose to ignore, knowing that the impact or likelihood will be low, there may be others with a high probability that you can plan for. The probability and impact values will be subjective depending on what the project is, and can be determined by the member of the project team with expertise in that area.
Attendees of the workshop today went through a case study example using these tools to identify risks and create rankings of most important risks, each group found 6 or more risks for the project in question (the actual case study project team had identified 85 potential risks in their process!) Risks identified included everything from weather to difficulty or delays in obtaining permits to interpersonal conflicts or lack of buy-in from key individuals. You can do this for any project at home by brainstorming risks on your own project (identifying the cause, event and impact for each) and then assigning each a probability and impact value. Based on this you can rank the top risks from most to least likely.
Once you're aware of your risks and their probabilities/impact values, you can make your risk management plan.
Three techniques for risk response are:
Avoidance: eliminate the threat by eliminating the cause
Transfer & Share: reduce impact by sharing costs with an outside partner or share risks by contracting out
Mitigation: Reduce the probability to reduce the risk - take action to change the likelihood of a risk happening
Acceptance: (Active & Passive) Either have a plan in place for if a risk occurs, or passively accepting it when it occurs
Michelle LeBlanc is a Social Media Strategist at IIR USA and the voice behind the @Project_World twitter. She may be reached at firstname.lastname@example.org