Risk Reward

 

Risk is everywhere. Crossing the street. Changing lanes. Joining a pickup basketball game. Digging in the yard. Some risk we take for granted—most drivers observe the red light, so we go ahead and cross the street; after all, we want to get to the other side.

On projects, risk gets more complicated. There are unmarked roads to navigate with possible bumps or ditches around every curve. The consequences of being surprised can be costly. But managing projects in fear can also be damaging because risks are tied to rewards. And so risk management is part discipline, part art—a balancing act that requires courage on the part of project managers, teams and stakeholders.

Successful organizations understand that managing risk is as important as managing the schedule, budget or scope. They know unaddressed risks can threaten a project but also recognize that many risks carry potential benefits that can improve the outcome beyond original expectations.

In one sense, risk management at its best is an entrepreneurial endeavor. Data-gathering, analysis and identification are fundamental, but the big payoffs come when new decisions lead to redefined project plans that capitalize on the learnings and opportunities that risks can bring. The huge challenge for most organizations is to build an infrastructure that allows, in fact encourages, creative responses to risk.

Unfortunately, in many organizations risks are handled like hot potatoes—juggled and tossed from person to person, or buried. No one want to hear the bad news, but the silence can be deafening and far from golden. In this environment, stakeholders often receive much worse news later, when it is much more damaging.

A related barrier to better risk management is mistrust—or perhaps, just a lack of faith in new ideas or approaches. Sponsors are uncomfortable with redefining a project in the middle of it. They feel they are losing control.

But to manage uncertainty on transformative projects where unknowns are the rule, not the exception, continuous redefinition is the only way to go. There is still oversight, but it observes other criteria. You're no longer solely monitoring progress to the goal; you're also monitoring—and responding to—what you are learning along the way.

At its heart and soul, risk management is a conversation. It's looking at tradeoffs with your partners and stakeholders and saying, 'Here are the things that could happen. Do we need to take action now? Do we need to change our project plan? Do we go for it?'"

But if political realities, resource limits or a silo infrastructure conspire to make that conversation difficult if not impossible, project managers still should do everything possible to keep the discussion alive on their teams. Most team members are eager to talk about risk once they believe they can do so openly without being tagged complainers.

So let's be risk-aware, not risk-averse. Let's be risk opportunists, not risk opponents. It's a shift in mindset that offers great rewards.