To manage risks properly, we must allocate resources to implement a risk management plan. Some resources must be allocated in advance of anticipated risk events, and some must be held in reserve "just in case."

Damage to one of the low causeway sections of the Interstate 10 Twin Bridge across Lake Pontchartrain, following Hurricane Katrina in 2005. The storm surge brought by the hurricane raised the water level high enough to trap air beneath the concrete causeway's spans, causing them to float off the bridge pier caps. (See Chen, et al., Analysis of the Interstate 10 Twin Bridge's Collapse During Hurricane Katrina). The bridge was built in 1963, when the effects of hurricane storm surge were already understood, though not as well as they are now. Two other nearby bridges, a railroad bridge and the US 11 bridge, withstood the storm with only minor damage. The U.S. 11 bridge opened February 18, 1928. It survived, in part, because its concrete girders are arched, and therefore trapped a smaller volume of air under its spans, reducing their effective buoyancy during the storm surge.
Back in 2001, the exposure of New Orleans to hurricane risk was so well known that it was the subject of a superb article in Scientific American (See M. Fischetti, Drowning New Orleans). Moreover, the storm's effects on the bridges were entirely predictable — explaining them entailed no new engineering discoveries. One can easily speculate about how the outcome of Katrina might have differed if resources for risk study and mitigation had been made available, but one also wonders what disasters elsewhere are yet preventable. Photo by Commander Mark Moran, Lt. Phil Eastman and Lt. Dave Demers, NOAA. Courtesy U.S. National Oceanic and Atmospheric Administration.
Many organizations have difficulty allocating these resources, especially when resources are thin and risks haven't yet materialized. The temptation to hope that all will go well can lead some to attempt projects with insufficient reserves for risks. And it can lead others to deny that specific risks can ever occur.
For example, despite decades of widely accepted predictions, the U.S. government failed to provide adequate resources to New Orleans for hurricane-induced flood risk mitigation and planning.
In the project environment, at best, project managers or risk officers identify risks and propose resources to mitigate them. Project sponsors and organizational management then review these proposals for sufficiency and reasonableness. They negotiate with the project staff as necessary, and then they allocate appropriate resources for risk mitigation and management.
In many organizations, things rarely work that way. Organizations commit themselves to risk plans that amount to little more than naïve hopes and wishes for the best. How does this happen?
In some cases, the available resources cannot cover all identified risks unless everything breaks favorably. When someone identifies a risk that's expensive to manage, risk revision, exclusion, or denial enables those involved to commit to the effort despite resource shortages. When this happens, risks that do materialize can threaten the project — or worse, threaten the enterprise.
What can organizations do to manage risk revision?
One approach involves adding to the project plan an Appendix of Revised or Excluded Risks — risks that someone proposed, but which were edited before inclusion in the risk plan, or excluded altogether. For each revised risk, the appendix includes the original proposed risk, a revision history with dates, the arguments in favor of and against such revisions, and the names of all involved in each revision decision. The Appendix of Revised or Excluded Risks serves several purposes.
- Audit trail
- If the organization someday decides how particular risk types are to be addressed, the Appendix becomes a useful tool to help project teams bring their projects into compliance.
- Deterrence
- When available resources
can't cover all identified
risks, we sometimes
revise the risks - To whatever extent organizational politics or intimidation play any role in risk revision or exclusion, the knowledge that revision decisions will be recorded in the Appendix might deter some intimidators or some who abuse political power to achieve their ends.
- Support for organizational learning
- The Appendix could provide useful data for project retrospectives, or even earlier, if trouble does appear during the project's execution.
If you think risk revision and denial aren't happening in your organization, you might want to add that observation to your Appendix of Revised or Excluded Risks. Top
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Related articles
More articles on Project Management:
Scope Creep and Confirmation Bias
- As we've seen, some cognitive biases can contribute to the incidence of scope creep in projects and
other efforts. Confirmation bias, which causes us to prefer evidence that bolsters our preconceptions,
is one of these.
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.
Irrational Deadlines
- Some deadlines are so unrealistic that from the outset we know we'll never meet them. Yet we keep setting
(and accepting) irrational deadlines. Why does this happen?
How to Get Out of Firefighting Mode: I
- When new problems pop up one after the other, we describe our response as "firefighting."
We move from fire to fire, putting out flames. How can we end the madness?
Premortems
- Premortems are simulated retrospective examinations of future events, conducted as if those future events
had already occurred. By combining the benefits of psychological safety with a shift in temporal perspective,
they offer advantages for planners.
See also Project Management for more related articles.
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- Unwelcome events have two kinds of effects on decision-makers. One set of effects appears as we respond to events that have actually occurred. Another set manifests itself as we prepare for unwelcome events that haven't yet occurred, but which might occur. Making a wrong decision in either case can be costly. Available here and by RSS on July 16.
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- Microdelegation is a style of delegation in which the delegator unintentionally communicates the task to the subordinate in such detail and so repetitively that the subordinate is offended. As a result of this delegation style, many subordinates feel distrusted or suspected of fraud or goldbricking. Available here and by RSS on July 23.
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