More on risk management importance/effectiveness
From the Risk Insights from The Risk Doctor Blog
by David Hillson
Following on from my last blog posting (“Risk Management: Important or Effective (or both)?”), you might be interested in the stats from our research. We had 561 responses, and the number of respondents choosing each option were as follows:
1. Risk management is important and effective
228 responses (41%)
2. Risk management is important but not effective
236 responses (42%)
3. Risk management is not important and not effective
93 responses (17%)
4. Risk management is not important but it is (somehow) effective
4 responses (<1%)
It’s encouraging to see that the vast majority (83%) believe that risk management is important, but it’s also worrying that only half of these people, teams and organisations feel that their risk management is effective. Clearly there is work to be done in applying risk management in practice. This is likely to involve the Three T’s (Tools, Techniques, Training), and a lot of support and advice is available in the marketplace for these areas.
Even more worrying are the 17% who say that risk management is not important! This means that one in six individuals, teams and organisations believe that they do not need a structured approach to enable them to look ahead and prepare for what’s coming. Instead they are happy to be reactive, deal with things as they arrive, and hope for the best. Those of us in the majority who recognise the importance of risk management have some persuading to do! We need to be selling the benefits of risk management to our colleagues, explaining how and why it helps us to be more successful, and demonstrating the value of risk management in action.
Maybe we should conduct this research again in a few years and see if the position has improved. It would be great if everyone knew that risk management was important, even if we aren't all fully effective (yet) in managing risk in practice.
Posted on: November 17, 2015 07:10 AM |
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Comments (15)
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Great Mr Hillson.
Next to the three T's I'd place a C (Culture). Culture must be created and maintained through time by all organisations supported on training, considering that tools and techniques are located within training. But risk management is important... And MUST be effective.
David Hillson
The Risk Doctor| The Risk Doctor Partnership
Petersfield, Hampshire, United Kingdom
Agreed Alberto. There are many other factors in addition to the Three T's, and Culture is certainly one of them.
I believe risk management is of great importance in all industries. Closely tied to Quality and very helpful in preventing scope creep as it encourages project teams to be proactive in anticipating issues and potential hazards that may influence the performance of projects.
David Hillson
The Risk Doctor| The Risk Doctor Partnership
Petersfield, Hampshire, United Kingdom
Thanks Alejandro, I agree! In terms of the link between risk and quality, it's interesting to see that the updated ISO 9001:2015 emphasises "risk-based thinking" very strongly.
A lot of things can be said about the research but then the figures are needless to say DISTURBING.
There are people who consider the efforts spend on risk management as futile. In my experience, they are the people who have done rather simple and straightforward projects.
In an event they fail to comprehend that time spent in risk identification and analysis would had saved the efforts and costs later on.
rachel town
Kent State University Ashtabula
Ashtabula, Oh, United States
Risk management is extremely important! When preventative actions are implemented huge catastrophic messes are avoided which can become costly as a rapid pace! Plan ahead and always have a backup plan in case the first strategy fails!
David Hillson
The Risk Doctor| The Risk Doctor Partnership
Petersfield, Hampshire, United Kingdom
@Khawaja and Rachel. Thanks for your comments. I agree, it IS important!!! So why do some people think it is not?? It seems obvious to me that time spent looking ahead and proactively addressing threats and opportunities must help the project to be more successful. It will certainly reduce the time spent on dealing with problems later on.
Andreia Reis
PMO Coordenator| Adimax Indústria e Comércio de Alimentos
Mairinque, São Paulo, Brazil
Thank you for Sharing the result.
Bruce Wilkinson MBA, PMP
Expert Project Manager / Trustworthy Executive Assistant / Business Coach| goBRUCE Business Services
Cuenca, Azuay, Ecuador
I think that Khawaja hit the nail on the head when he indicated that those who disparage risk management must be involved in "simple and straightforward projects." It might also be that they are in organizations that do not yet have a mature project management culture.
To look at it from another perspective, would you get in the rocket taking off on a major NASA Mars mission if you knew that the PMO had decided that risk management was not effective and unnecessary, so had eliminated that process from its preparations?
@ Bruce Wilkinson
Very thought provoking example. :)
@David Hillson
For your question as to why do some people think risk management is not important, here is an example I once faced.
At one instant in a project we were asked to release the risk contingency if we didn't have any existing risks to support it. The project was well ahead of schedule with all the major equipment delivered to site and construction works were going at great pace. With the given situation of the project we were optimistic that nothing can go wrong and we had to think REALLY REALLY hard about any possible risks. It is at that time statements like "we are just making up risks to keep the contingency", "the management is wasting our time", "this is a futile effort" came up.
Yes, we cannot foresee everything and it is for the same reason that risk assessment is a continuous process.
Adam Ward
Setup Operator| MICO Inc.
Vernon Center, Mn, United States
I agree with all of the reasons provided thus far, as to why risk management is deemed "not important." The reason which resonated most in my head was the "maturity" of the notion of project management within the organization.
I was just informed that our organization has "not yet proven the value of certified project managers," by the head of our HR department. That should indicate the level of project management maturity I'm up against. I would not be shocked if risk management was voted as not important within our organization. We have a long way to go.
On another note, I did not see the actual survey. Perhaps there was a structural flaw which influenced the results.
David Hillson
The Risk Doctor| The Risk Doctor Partnership
Petersfield, Hampshire, United Kingdom
Hi Adam. Thanks for reminding us about the potential influence of structural bias and the importance of survey design. We used a reputable survey business to gather this data, and they designed the actual survey instrument. These two questions were part of a larger survey on other aspects of organisational maturity, and I've just pulled out the results for risk management to discuss in this blog post.
I wish you well as you seek to persuade your colleagues of the value of project management - and good luck in managing your risk!!
Vincent Guerard
Coach - Trainer - Speaker - Advisor| Freelance
Mont-Royal, Quebec, Canada
Was there any weighting to the effectiveness? Was it just a perception or an evaluated result?
Sometimes people just don't measure result, thus believe it is not effective.
David Hillson
The Risk Doctor| The Risk Doctor Partnership
Petersfield, Hampshire, United Kingdom
Hi Vincent. This research was conducted using a simple questionnaire format with a Lickert scale. As with all questionnaires of this type, responses reflect the perceptions of the respondents. In that sense, these results are unweighted, but they do reflect how people see the risk process that they are using.
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