Visual Risk Management

 

I believe that part of the reason why risk management-types have a hard time getting the management science community at large to actually execute the types of analysis they keep harping on about is that the underlying concepts are not very intuitive. Besides their relentless abasement of the language (e.g., you will search dictionaries of the English Language in vain for the definition of “opportunity” being somehow related to “upside risk”), the risk managers’ attempts to expand the use of Gaussian curves into areas of business analysis where they truly do not belong via eat-your-peas-style hectoring are not conducive to more wide-ranging acceptance. What’s needed is a vehicle for them to reduce the results of their analyses into more intuitive formats, similar to last week’s blog’s discussion of alternate ways of portraying (valid) cost and schedule performance information. I think I may have found this vehicle – the Chernoff Face.

Herman Chernoff is an American applied mathematician, currently working at Harvard. He devised a way of conveying information in a graphic format that could be readily understood by a variety of people, with varying degrees of sophistication. This format is called the Chernoff Face. The desired information is compared to a baseline for each of its components; then, when the data deviates from that baseline, the aspects of the face change correspondingly.

Consider the following cartoon face:

We’ll use this as our baseline. Now, the risk management types categorize risk events as administrative, insurable, technical non-somethingorother, Sagittarius, and only within the last two minutes of a half. Since administrative risks tend to be low-impact, we’ll adjust the face to include smaller diameter eyes, upticked brows, and a bit of a frown, so:

When the risk assessment indicates a low-impact, administrative risk, this pensive-looking Chernoff Face does a much better job of conveying this information quickly and intuitively than some decision-tree alternative listing. However, when a serious threat appears on these guys’ radar screens, a more dramatic look is indicated. For real trouble, we should increase eye diameter, push the brows up at a more severe angle, and do something with the mouth, as in:

Aside from little-trouble-big-trouble, though, the risk managers’ main communications have to do with their frustrations with people not listening to them. For those project managers who just don’t get it, in the risk managers’ eyes, this report should do the trick:

Alternately, for those PMs who do understand risk management, and simply eschew it, this style conveys the appropriate sentiment:

…which often leads to the need to figure out how to get at the project’s charge codes anyway, so…

The downside, of course, is that, by conveying risk management data this directly, it goes a long way towards de-mystifying the nature of the analysis when decoupled from the mind-numbing statistical jargon. Well, “downside” from the risk managers’ perspective, anyway…