Raquel Soria UceroGlobal Clinical Outsourcing ManagerSanta Coloma De Gramenet, Barcelona, Spain
Hi, I am struggling with risk management, hopefully someone can help me with the basics of this. I am starting on Project Management but I do have experience on computerised system validation, so I am used to perform risk analysis (based on GAMP 5 guideline), and it is not rare that a risk can be both a threat and an opportunity. I am not saying this is usual, but it can happen. Based on your experience, background, knowledge: I am saying a nonsense?
i.e.:
- Risk title: Suppliers do not invoice as planned
- Risk description & impact: The invoice is issued prematurely, negative impact on the cash flow, therefore is a threat
- Rosk description & impact: The invoice is issued late, positive impact on the cash flow, therefore is an opportunity
I am starting my training in Project Management!! Please bear this in mind when answering my "stupid" question! ;) Thank you!! Saving Changes...
Eric SimmsSenior Program ManagerBaltimore, Maryland, United States
Your question is a good one. In practice, risks are very rarely both threats and opportunities; usually they are much more one or the other. Working through the scenarios you described in more detail will help reveal that. For example, just because a supplier sends an invoice early doesn't mean you have to pay it early. A call to the supplier to straighten out the mistake is usually all that is required. Therefore, a premature invoice isn't a significant threat. Similarly, a late invoice will give you a temporary cash flow, but since you don't know when the invoice will arrive, you can't safely utilize those additional funds. Therefore, a late invoice isn't much of an opportunity. Saving Changes...
Dinah YoungProject Manager / Software Asset Manager| Prince William CountySpringfield, Va, United States
There may be a situation where this is true, but I can not think of one.
What is more likely is the an opportunity may generate a secondary risk.
For example, one time we upgraded a server which allowed the applications to run faster and therefore process more records. That's good, right? Great opportunity. Well the code was older and the way the unique key was created was to add the time including the seconds to the end of a number. The code ran so fast that more than one record was processed in a second and it resulting in duplicate keys. Not good. So we had to rewrite part of the code. Saving Changes...
we are expecting a certain volume of customers to sign up for a service but there is uncertainty around this. If we get less than a breakeven number then we would not be financially viable but if we get more than a certain number we might not be able to handle the volume of orders.
The same uncertainty generates both a threat and an opportunity.
Kiron Saving Changes...
Stephen GreyAssociate Director| Broadleaf Capital International Pty LtdAustralia
If you can see and understand both the outcomes you describe, why does it matter what labels you put on them?
I find that any sort of design, development and implementation work is usually subject to uncertainties that can work for or against a project's success. The simplest one is team productivity. It will rarely be exactly what you have assumed in your estimate and plan. It could be better than expected so costs are reduced and the schedule is shorter than expected. It could be worse and the converse happens.
Insisting on forcing these uncertainties into an event framework with a win/loss dichotomy doesn't help. It only creates an overhead on our thinking.
Everything is more straightforward if we raise our sights to the sources of uncertainty and focus on understanding the scenarios we might encounter. For a small example of how this can be explored and analysed, see http://broadleaf.com.au/resource-material/...-project-costs/ Figure 3 and Table 1 illustrate how a heap of what could be small discrete risks can be addressed more simply by thinking about their consequences first and working out how they will pan out. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Not at the same time. As Kiron stated above "the same uncertainty generates both a threat and an opportunity". Saving Changes...
Stephen GreyAssociate Director| Broadleaf Capital International Pty LtdAustralia
Obviously both aspects of an uncertainty will not manifest themselves at the same time, just as all values in a range of possible outcomes will not manifest themselves at the same time, only one of them can do that.
If you are only concerned about what to do when something good or bad happens, then you might want to deal with them separately. If you are interested in thinking about what is behind the uncertainty so you can figure out how to manage it proactively, seeing the whole picture is more useful.
Descent into detail feels good in the short term but it incurs an administrative overhead and we get into not being able to see the wood for the trees. There is a lot of mileage in the principle of KISS. Saving Changes...
Risk is just one of those dirty little words that has for so long been associated with negative connotations, thus the propensity to be confused at how risk could ever be an opportunity. Especially when risk is defined as: "a situation involving exposure to danger."
I think the best way to think of risk is that you need both threat and opportunity to counterbalance each other. You would already know that a certain number of risks will present a certain threat probability and impact to the project, and that threat is measured in dollars typically. Opportunities will bring revenue into our project or save costs to the project, by aggregating the opportunity savings with the threat costs.
Another way to look at it is we have a bucket of money to handle all risks. Negative risks or "threats" will add money/resources to that bucket. Positive risks of opportunities will take money/resources away from that bucket. Saving Changes...
Michael DelaneyPartner| Delaney Management LLCWest Chester, Pa, United States
The focus is on identifying the risk and how you will handle them. Mitigate the negatives and exploit the positive. Understand how they help or hinder you from attaining your goal Saving Changes...
RAJESH K LProject Manager, PMP| Bharat Electronics, Bengaluru, IndiaBengaluru, Karnataka, India
The word Risk is normally attributed to loss or threat etc. In this context following saying is relevant "A danger foreseen is half avoided". Similarly if a risk is identified and proper risk management practices/principles are applied Saving Changes...
Phil DoyleSenior Project Manager| Orangebus (Capita)Newcastle Upon Tyne, Tyne And Wear, United Kingdom
A Risk is an event that may or may not occur that will have an impact if it does. That impact could be widespread across the business/organisation/technical domains etc, as such some may be positive and some may be negavitve. They obviously tend to correlate with one or the other, but in complex environments there could be both. Saving Changes...
