We began our catalog of risk management strategies last time, exploring Denial, Shock, Acceptance, and Chaos. None of those four are particularly effective with respect to achieving our goals in the context of adversity. One more ineffective strategy remains to be explored before we examine some more effective approaches.
- This strategy, usually executed unconsciously, involves repeated delay of planning to address acknowledged risks. We just can't seem to find time to sit down and plan for risks.
- Slogan: "Yes, we have to plan for that risk, but we're too busy right now. Maybe tomorrow."
- Advantage: Deferring planning enables the procrastinator to defer acknowledging the cost of managing risk, which can be helpful in persuading decision-makers to undertake or continue the effort, because its full cost is unrecognized. Procrastinating also enables the procrastinator to claim that planning is "in progress" when actually it isn't.
- Danger: Procrastinating leads to a perception that the resources at hand are sufficient, when they might be wholly inadequate. It can also lead to delays so great that the organization can become unable to prepare for the risk prior to the actual risk event.
Let's look now at strategies that actually facilitate progress.
- Avoidance is the choice to eliminate the possibility of loss by changing what you're doing. Other losses might happen, but not that one. For example, if we include an overview of the Marigold project in our presentation, we risk being asked about Issue 18, for which we have no answers yet. To avoid that risk, we decide not to provide a general overview of Marigold. Instead we'll discuss only Issue 17, which is almost resolved.
- Slogan: "If we use this other design instead, we can avoid that risk."
- Advantage: Finding Sometimes we can be so averse
to risk that we convince ourselves
that a risk-avoiding alternative
approach can achieve our goals,
when it actually cannota clever alternative to what we planned originally, and thereby avoiding a risk we would have borne under the original approach, can be both elegant and effective.
- Danger: Sometimes we can be so averse to risk that we convince ourselves that a risk-avoiding alternative approach can achieve our goals, when it actually cannot.
- Limitation strategies reduce the probability of the risk event occurring, or reduce the size of the loss if it does occur, or both. Using limitation, we make the risk acceptable by reducing the expected value of the loss.
- Slogan: "We can reduce the probability of that risk (or the cost of that risk) if we do this."
- Advantage: The expected value of the loss associated with a risk event is the product PV, where P is the probability of the occurrence and V is the value lost. If we can reduce the expected value enough, we can proceed with confidence, even if the risk event occurs.
- Danger: Estimating probabilities is notoriously difficult. If we're wrong in our estimates, and the risk event occurs, we could be in trouble.
Projects never go
quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. It helps readers learn the subtle cues that indicate that a project is at risk for wreckage in time to do something about it. It's an ebook, but it's about 15% larger than "Who Moved My Cheese?" Just USD 19.95. Order Now! .
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More articles on Project Management:
- Scheduling as Risk Management
- When we schedule a complex project, we balance logical order, resource constraints, and even politics.
Here are some techniques for using scheduling to manage risk and reduce costs.
- Risk Management Risk: I
- Risk Management Risk is the risk that a particular risk management plan is deficient. It's often overlooked,
and therefore often unmitigated. We can reduce this risk by applying some simple procedures.
- Ten Approaches to Managing Project Risks: III
- Project risk management strategies are numerous, but these ten strategies are among the most common.
Here are the last three of the ten strategies in this little catalog.
- Wishful Interpretation: II
- Wishful "thinking," as we call it, can arise in different ways. One source is the pattern
of choices we make when we interpret what we see, what we hear, or any other information we receive.
Here's Part II of an inventory of ways our preferences and wishes affect how we interpret the world.
- Unresponsive Suppliers: II
- When a project depends on external suppliers for some tasks and materials, supplier performance can
affect our ability to meet deadlines. How can communication help us get what we need from unresponsive
Forthcoming issues of Point Lookout
- Coming May 2: Narcissistic Behavior at Work: VII
- Narcissistic behavior at work prevents trusting relationships from developing. It also disrupts existing relationships, and generates toxic conflict. One class of behaviors that's especially threatening to relationships is disregard for the feelings of others. In this part of our series we examine the effects of that disregard. Available here and by RSS on May 2.
- And on May 9: Unethical Coordination
- When an internal department or an external source is charged with managing information about a large project, a conflict of interest can develop. That conflict presents opportunities for unethical behavior. What is the nature of that conflict, and what ethical breaches can occur? Available here and by RSS on May 9.
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- The Power Affect: How We Express Our Personal Power
- Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.