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Risk Management

The Management Pocketbooks Pocket Correspondence Course

Pocketblog has gone back to basics. This is part of an extended management course.

We are now at the end of our series of blogs, looking at some of the essential models that a project manager will need. We have covered:

Project Management blogger Glen Alleman (at Herding Cats – a trenchant blog by a serious heavy-weight project manager) describes risk management as the way grown ups do project management. I thoroughly agree (and have written a book on it, ‘Risk Happens!’ to boot).

Why does he say this? I can’t speak for Glen (I wouldn’t dare) but my own feeling is that professional project managers have nailed the planning process as a fully developed skill set. So all the uncertainty in your project – and therefore the difference between success and failure – lies in the risk. This must take up a large part of your attention.

So let’s see how to do it…

The Risk Management Process

Risk Management is a simple process:

  1. Identify anything and everything that you think can go wrong
  2. Analyse each potential risk and prioritise them by assessing the impact of their consequences, and the likelihood of them happening. High likelihood, high impact risks are your top priority, and low impact, highly unlikely risks can be deliberately set to one side – you cannot ignore them, but you can choose to do nothing.
  3. For everything else, plan what you will do. Will you:
    • mitigate the risk by reducing its impact?
    • reduce the risk by making it less likely?
    • create a contingency plan in case it materialises?
    • find someone else to take the risk for you?
  4. Once you have your plans, put them into effect
  5. Review the outcomes of your interventions and, if necessary, plan and take further steps.

Risk Analysis

We analyse risks against their potential impact, their likelihood, and sometimes other factors like how soon they might affect us. The commonest tool is a chart of impact versus likelihood, onto which we plot our risks. The best approach is to keep it simple. Here is an example…

Risk Analysis


Further Reading

From the Management Pocketbooks series:

  1. Project Management Pocketbook
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Reward Failure

Yup, you heard me.

Nice Try

But why?

Well, first, we need to define terms:

Reward: celebrate, congratulate, give praise.

Failure: making the effort and not succeeding.

You get what you reward, right?

Dead right.  So, if you only reward success, people will succeed more, yes?  Of course yes.  But to achieve that, what behaviours will you get?

Protective, cautious behaviours that are calculated to minimise the risk of failure of course.

So what will change?  Very little – too much risk.  In fact, all you will get is ‘safe’.

But what if you reward failure?

Well, if you just reward failure, that would be silly.

But if you reward the effort,

… and if you include in your evaluation of effort the good judgement that leads to well calculated risks

… and if you assess ‘well calculated’ against the evidence available at the start, and eschew ‘hindsight bias’

Then maybe your team will realise that success is not easy, but that striving for real, hard-fought, worthwhile success is something you value – and so should they.

Reward good judgement and effort – not success, which may, after all, have little to do with either, and everything to do with luck.

Don’t reward luck.

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