Assessing Risk in the Real World

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By Ramiro Rodrigues

 

Is risk management just an exercise in paranoia? 

 

That’s the question I’m often asked. I like to respond by saying there are both negative and positive risks.

 

A risk is a situation in which it cannot be certain whether a specific result will happen. That potential cannot be discounted. Thus, any risk hypothesis—whether for small or large risks—is subject to some sort of management strategy. While we often think of negative risks, positive risks present opportunities for organizational or project gains.

 

Risk management strategies can be applied to our daily lives. Take, for example, my own experience.

 

A few years ago, I was invited to hold a workshop on project management best practices for a service company. Concerned about the event, I decided to invite a colleague whom I trust to share the work (strategy: share) and increase the chances of the workshop being successful (strategy: improve). When checking his schedule, my colleague realized that he would be returning from a trip at 6 a.m. on the day of the workshop, which was scheduled to start at 9 a.m. Even knowing that flight delays are more common than we would like, we decided to take the risk (strategy: accept).

 

In the weeks leading up to the event the preparation flowed well. We met with the client and tested the presentation dozens of times (strategy: explore), but the possible flight delay did not leave my mind. For this reason, I studied not only my part of the presentation, but also that of my colleague (strategy: eliminate).

 

When the day arrived, I woke at 6 a.m. to find two messages from my colleague on my phone. The first one said, "I've landed?” This gave me a sigh of relief. The second said, "I'm really ill. I'm going to a hospital.” I called my colleague and verified the illness.

 

What a great irony! All my fears arising from my colleague's risk of a delayed flight were realized, but not because of that event.

 

Some changes were necessary. First, I had to substitute the car journey with a taxi (strategy: transfer). Second, I had to remove specific parts from the presentation to reduce the impact of my colleague’s absence (strategy: mitigate). Even without doing so through a documented plan, I had used all of the recognized risk response strategies.

 

For me, it became clear that the great gain from risk management is in the exercise of thinking beforehand and being able to choose the best options available.

 

The outcome of the workshop? I imagine it would have been better if my colleague had been able to attend. But judging from the applause and words of praise, I believe that it was a success.

Posted by Ramiro Rodrigues on: December 13, 2018 12:24 PM | Permalink

Comments (17)

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Good article, but it could be more clear if you decribe the risks in your example.
As identifying the risks is the first step in managing them.
I cannot understand which risk you "improve" by "sharing".
And I cannot find such strategies as "improve" and "explore" in PMI publications. Have they missed it in PMBOK Guide?

I appreciated the way you incorporated risk strategies into your story. This highlights the way that we perform Risk Management in our professional life, as well as the projects we manage.

Aleksei, those items you pointed out were technically not Risks. They were Opportunities, which is a part of Risk Management. Think of an Opportunity as the opposite of a Risk, in that taking advantage of an Opportunity will increase the benefit of the project. In this example Ramiro was "Improving" the quality of the presentation by "Sharing" the presentation duties, which can bring additional perspective to the subject matter and better hold an audience's attention.

Thanks for the blog on risk. I am particularly glad to see you defined risk as both positive AND negative uncertainties. While the PMBOK Guide and others give similar definitions, it is common in practice to focus on the negative. 




Indeed, we need to prompt and effective in assessing risks and applying responses.
Thanks for sharing.

Good One,Thanks for sharing!

Very interesting.

Good sharing!!!

Nice representation of case. Personally I would try to follow the same in each of my next assignment.

A nice and simple risk management case senerio, having a secondary risk incorporated into the case study could have made it a perfect 10. Thanks for sharing.

Thanks for sharing a real life Risk management.
I take it as a good example of risk management and problem solving strategy.

Thanks for sharing. Nonetheless, I disagree in some parts of your article. For instance:

1) "Even knowing that flight delays are more common than we would like, we decided to take the risk (strategy: accept)." Here the risk is "Due to a flight delay, the co-host might not attend the workshop". The response plan is "For this reason, I studied not only my part of the presentation, but also that of my colleague." The strategy thus is to mitigate. The strategy would be "eliminate" only if you decided not to have a co-host, in my opinion.

2) "We met with the client and tested the presentation dozens of times (strategy: explore)". Here the risk is "due to a technical problem, the presentation might fail." The response plan is "testing the presentation dozens of times", thus, the strategy is to mitigate, again.

3) "I had to remove specific parts from the presentation to reduce the impact of my colleague’s absence (strategy: mitigate)." This is not a risk anymore, because it has already occured. Now it is an issue.

I agree with Aleksei Nikitin, you should have identified the risk first. Defining the risk in terms of CAUSE - EVENT - IMPACT is also very important.

Prepare for the worst, your ready for reality. Nice example, thank for sharing.

Great real life examples.. Thanks for sharing...

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