Managing Risk Revision

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.

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    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 welcome

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.

Related articles

More articles on Project Management:

Films Not About Project Teams: II

Here's Part II of a list of films and videos about project teams that weren't necessarily meant to be about project teams. Most are available to borrow from the public library, and all are great fun.

The True Costs of Cost-Cutting

The metaphor "trimming the fat" rests on the belief that some parts of the organization are expendable, and we can remove them with little impact on the remainder. Ah, if only things actually worked that way...

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.

How to Make Good Guesses: Tactics

Making good guesses probably does take talent to be among the first rank of those who make guesses. But being in the second rank is pretty good, too, and we can learn how to do that. Here are some tactics for guessing.

Unresponsive Suppliers: I

If we depend on suppliers for some tasks in a project, or for necessary materials, their performance can affect our ability to meet deadlines. What can we do when a supplier's performance is problematic, and the supplier doesn't respond to our increasingly urgent pleas for attention?

See also Project Management and Workplace Politics for more related articles.

Forthcoming issues of Point Lookout

Coming October 5: Downscoping Under Pressure: I

When projects overrun their budgets and/or schedules, we sometimes "downscope" to save time and money. The tactic can succeed — and fail. Three common anti-patterns involve politics, the sunk cost effect, and cognitive biases that distort estimates. Available here and by RSS on October 5.

And on October 12: Downscoping Under Pressure: II

We sometimes "downscope" projects to bring them back on budget and schedule when they're headed for overruns. Downscoping doesn't always work. Cognitive biases like the sunk cost effect and confirmation bias can distort decisions about how to downscope. Available here and by RSS on October 12.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrendbTtLLSVlUPPCNkAner@ChacthFxWKdRwnLylOCDoCanyon.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