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."
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.
- 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 Next Issue
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 . Order Now! .
Your comments are welcomeWould you like to see your comments posted here? rbrenHoWzUJVeioCfozEIner@ChacbnsTPttsdDaRAswloCanyon.comSend me your comments by email, or by Web form.
About Point Lookout
Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.
Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.
Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.
Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.
More articles on Project Management:
- My Right Foot
- There's nothing like an injury or illness to teach you some life lessons. Here are some things I learned
recently when I temporarily lost some of my independence.
- TINOs: Teams in Name Only
- Perhaps the most significant difference between face-to-face teams and virtual or distributed teams
is their potential to develop from workgroups into true teams — an area in which virtual or distributed
teams are at a decided disadvantage. Often, virtual and distributed teams are teams in name only.
- Nonlinear Work: When Superposition Fails
- Much of the work we do is confounding, because we consistently underestimate the effort involved, the
resources required, and the time required to get it done. The failure of superposition can be one reason
why we get it wrong.
- Design Errors and Groupthink
- Design errors cause losses, lost opportunities, accidents, and injuries. Not all design errors are one-offs,
because their causes can be fundamental. Here's a first installment of an exploration of some fundamental
causes of design errors.
- Risk Creep: I
- Risk creep is a term that describes the insidious and unrecognized increase in risk that occurs despite
our every effort to mitigate risk or avoid it altogether. What are the dominant sources of risk creep?
See also Project Management and Workplace Politics for more related articles.
Forthcoming issues of Point Lookout
- Coming June 14: Pseudo-Collaborations
- Most workplace collaborations produce results of value. But some collaborations — pseudo-collaborations — are inherently incapable of producing value, due to performance management systems, or lack of authority, or lack of access to information. Available here and by RSS on June 14.
- And on June 21: Asking Burning Questions
- When we suddenly realize that an important question needs answering, directly asking that question in a meeting might not be an effective way to focus the attention of the group. There are risks. Fortunately, there are also ways to manage those risks. Available here and by RSS on June 21.
I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenHoWzUJVeioCfozEIner@ChacbnsTPttsdDaRAswloCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.
Get the ebook!
Past issues of Point Lookout are available in six ebooks:
- Get 2001-2 in Geese Don't Land on Twigs (PDF, )
- Get 2003-4 in Why Dogs Wag (PDF, )
- Get 2005-6 in Loopy Things We Do (PDF, )
- Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, )
- Get 2009-10 in The Questions Not Asked (PDF, )
- Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, )
Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500-1000 words in your inbox in one hour. License any article from this Web site. More info