No Risk Is An Island

Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected]. Andy's new book Risk Management for Project Driven Organizations is now available.

  Risk Management   ProjectsAtWork  

Risk cannot be be managed in a vaccuum. It must be aligned with an organization’s strategic goals, and roll down from the portfolio to programs and projects. Here is an example of how a company’s goal to increase market share might impact risk at the project level.

In “Organizational Risk 101”, we introduced the concept of constraints hierarchy and aligning that hierarchy from the portfolio down. This month we explore that concept in more detail and address some of the questions raised by readers.

Almost all organizations have long-term strategic plans that outline what they want to achieve in the next three to five years. And almost always these plans are revised and updated each year. However, the process does provide an important overall direction for an organization — is it trying to broaden its presence in new markets or go deeper in existing markets, for example? This type of high-level direction will define the objectives for the year — revenue generation vs. operational efficiency, at a simplistic level — and it will also help to define the organization’s risk tolerance. A company that is aggressively trying to expand into new markets and establish a market share will necessarily need to be more risk tolerant than an organization that is looking to consolidate its position in a market where it already dominates — one is …

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