Communicating the Project's Risk Appetite
From the Communication Excellence in Project Management Blog
by Bill Brantley
Although Project Managers spend 90% of their time communicating, communication in project management is the most underdeveloped skill for project managers. This blog will help Project Managers become better communicators and thus, better Project Managers.
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I just finished Grant Avery's excellent book on managing risks in projects - Project Management, Denial, and the Death Zone. Grant uses examples from expeditions to Mt. Everest and the Antarctica to describe how project teams increase their risky behavior. Essentially, when project teams survive a near-miss and increase their capacity to survive risks, the project teams take on more risk. It is like climbing a rickety ladder. Some climbers keep climbing up the rungs despite how much the ladder sways and bends.
It is because some individuals have a higher risk appetite. Risk appetite is the difference between an individual's abilities and ambition. The wider the gap, the bigger the appetite. Even organizations have risk appetites. A major affect from big risk appetites is that an individual's risk homeostasis (level of risk acceptance) keeps resetting to higher and higher levels. This can also happen to teams and organizations which explains the Challenger and Columbia disasters (the "normalization of deviance" effect).
Grant introduces a framework to deal with out-of-control risk appetites along with some promising research on what makes great project leaders. A great read but there is one major piece missing - the vital role of communication in dealing with project risk and the key to great leadership. The word "communication" is not even in the index.
There is some interesting possibilities for project management communication research here . . .
Posted on: December 28, 2015 08:04 PM |
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Comments (5)
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Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates
New Westminster, British Columbia, Canada
Thanks for sharing the book your read Bill.
This is quite interesting, however, in projects we usually evaluate the Organization's Risk Attitude which is a combination of Appetite, Thresholds and Tolerance and based on that we set the limits. The, comes the role of the PM to manage and control the risks and make sure it doesn't go beyond the set limits. In most of the cases, if this happened, the project should be fine.
What is your opinion on the above Bill ?
Ramesh Chalamalasetti
PMI ATP Instructor – PMP®| PMI Certified Instructor - PMP Exam Prep®
Hyderabad, Andhra Pradesh, India
Yes You're right Bill... (Risk) Appetite is the fine line between Ability & Ambition. Let me say it's also the fine line between Expectations & Experiences.
Typically organizations' risk appetite depends mainly on a) nature of industry (eg. Insurance in BFSI segment) b) tolerance levels and c) stakeholders buy-in for go/no-go with a risk. EOD, the PM must play the game within these boundaries set. His/her capability lies in broadening the boundaries by intelligently and diligently devising risk responses. And stupendous communication is the only savior in this direction.
Warren Simon
Program Manager| DoD
Baltimore, Md, United States
Sounds like an interesting read. One thing I'd like to correct you on, though:
"... the vital role of communication in dealing with project
"
Without communications and a proper Communication Plan, no project will be successful unless they happen to roll the dice just right at every turn, and that never happens. Communications are absolutely crucial in every aspect of PM (as is Risk Management), and yet so few people (many PMs included) understand or actively push this.
Gina Abudi
President| Abudi Consulting LLC
Amherst, Nh, United States
Sounds like an interesting book; one I will definitely pick up to read.
Luis Branco
CEO| Business Insight, Consultores de Gestão, Ldª
Carcavelos, Lisboa, Portugal
Dear Bill
Interesting this reflection on the theme: "Communicating the Project's Risk Appetite"
Thanks for sharing
Interesting concept:
"Risk appetite is the difference between an individual's abilities and ambition. The wider the gap, the bigger the appetite."
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