Risk Managers’ Customer Relations “Management”

 

As many of my regular readers know, I hold much of what passes for modern risk management to be transparently fraudulent, little more than institutional worrying tripped out in Gaussian curve jargon. But it seems that whenever anybody starts writing about the management sciences, everything suddenly becomes anodyne, as if it’s in bad taste at best, rabidly antagonistic at worst, to actually challenge bad theory openly. I don’t get that (aha! sayest the risk managers… Hatfield’s too stupid to understand our concepts!).

But March’s theme is customer relations management, so I’d thought I’d combine the two subjects to analyze – well, how does the peddler of fraudulent management science manage his customers? Is it not through deceit? Certainly, but that implies that the multi-billion dollar risk management industry is built on a foundation of sand, and that at some point in the future no amount of customer relations “management” will suffice to keep the façade up and functioning.

Soooo…. how does the risk manager manage his customers, knowing (if he’s smart and intellectually honest) that his epistemological bubble is bound to eventually burst?  Well, it’s been my experience that their favorite tactic is to assert that, should any manager eschew performing risk analysis, that they are ipso facto either failing to do due diligence in their managing of the project, or else too, ahem, ignorant to understand the vital importance of doing risk management. However, to the PM savvy enough to not be bamboozled into spending tens of thousands (at least) to avoid being so tagged, a few questions might, just might, be in order, such as:

1.      Can your analysis accurately predict future events?

2.      If so, why aren’t you already incredibly rich?

3.      If not, why should I pay you tens of thousands of dollars for your analysis?

4.      If, as much of your literature claims, risk management must be performed throughout the life of the project, can you show me the output from the information stream that your analysis provides – on an ongoing basis – that actually helps me manage this project?

If the risk management fellow performing the pitch for his company’s work is honest, the answer to question #1 is “no.” If he isn’t, then question #2 should probably snare him.

Question #3 is where we start to get to the root of the matter. The typical risk management “analysis” involves interviews with you and your principals, answering questions such as “what might go wrong?” “what are the odds of that happening?,” and “what would the cost impact be?” However, if you and your principals are aware of the things that might go wrong on your project, what possible information advantage can be attained by guessing (cross through) estimating the odds of occurrence? Don’t your principals already know what might happen? Isn’t that why experienced managers are preferable to inexperienced ones?

Taking question #3 further, let’s say that one of your project leaders tells the RM-type that there’s a 10% chance of something happening that costs the project $10,000. If the event eventually happens, does the estimate reduce the impact? If it does not happen, didn’t you just waste the amount of time and money it took to document that there was a 10% chance of it happening?

The final nail in the risk managers’ epistemological coffin is the answer to question #4. No, there isn’t a report that can be provided on an ongoing basis, derived from continued use of risk analysis techniques, that helps manage projects. It simply doesn’t exist. If it did, it would be as ubiquitous as the Cost Performance Report (format 1), or the Gantt Chart, provably legitimate outputs from valid PM analyses. Alas, if an unforeseen event hits your project, then the risk analysis will have classified it as an “unknown unknown.” If the event was foreseen, then the risk analyst can say “I told you so,” without any further assistance to your new circumstances. And, finally, if the event didn’t happen, then the waste of time worrying about it possibly having happened becomes all the more blatant.

Ultimately, my advice to risk managers on the best way to “manage” your customer relations is this: don’t let your clients think through the overall risk management process, ‘cuz if they do, they won’t be your customers much longer.