Risk Management Risk: II

In Part I of this two-part series, we examined the organizational and political risks of risk management plans and processes. Now we turn to the risks that arise from change and from the interactions between risks.

Risk dynamics risk

Risk is a dynamic attribute of projects. Even if a project were frozen in place, its risk probabilities and risk impacts could change, because its environment changes. It's necessary to review risk plans with a frequency compatible with the volatility of the risk environment, which is itself difficult to estimate.

Indicators of risk dynamics risk include risk plans that remain unchanged for long periods of time; budgets and schedules that omit risk reviews or perhaps schedule them infrequently; and retrospectives that don't address risk review. If these indicators are present, risk dynamics risk is also likely present.

Intra-project risk interactions

Risk interactions within a given project are especially problematic. Two risks might seem independent, but the probability of one occurring might change if the other materializes; or the response to one risk might alter the consequences of or the probabilities of materialization of others; or the response to one risk might limit the project's ability to respond to another.

For instance, if Arthur is backup for both Tory and Chris, all's well, as long as either Tory or Chris is available. If both become unavailable, we have trouble.

The method known as morphological analysis developed by Fritz Zwicky, is useful for uncovering intra-project risk interactions. In this method, you examine all pairs of risks and ask, "If both risks materialize, will our planned responses still be effective?" If you find that the answer is "no," you can revise your plan. You can generalize this procedure to triples of risks, quadruples, and so on. For more on morphological analysis, see the article by Tom Ritchie at the Web site of the Swedish Morphological Society. Or take your pick from hundreds of sources.

Inter-project risk interactions

An inter-project risk interaction occurs when conditions in a given project change risk probabilities in another project, or cause risks to materialize in another project.

For example, If Arthur is backup for both
Tory and Chris, all's well,
as long as either Tory or
Chris is availablesuppose two projects are scheduled to use the same resource serially. If the first project is delayed, the availability to the second project of that same resource changes. At the time of development of the risk plan of the second project, knowledge about the strategies and risks of the first would have been useful, but such information, sadly, is rarely shared.

To limit inter-project risk interaction risk, coordinate risk reviews with projects likely to transmit risk back and forth. If the risk profile of one of the projects changes, there is enhanced probability of impact on the other.

Most risk conditions are connected to at least a few other risk conditions, either internal or external to the project. Maps of these connections can be very helpful.   First issue in this series   Top    Next Issue

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More articles on Project Management:

Restarting Projects

When a project gets off track, we sometimes cancel it. But since canceling projects takes a lot of courage, we look for ways to save them if we can. Often, things do turn out OK, and at other times they don't. There's a third choice, between pressing on with a project and canceling it. We can restart.

Finger Puzzles and "Common Sense"

Working on complex projects, we often face a choice between "just do it" and "wait, let's think this through first." Choosing to just do it can seem to be the shortest path to the goal, but it rarely is. It's an example of a Finger Puzzle.

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.

On the Risk of Undetected Issues: II

When things go wrong and remain undetected, trouble looms. We continue our efforts, increasing investment on a path that possibly leads nowhere. Worse, time — that irreplaceable asset — passes. How can we improve our ability to detect undetected issues?

Some Perils of Reverse Scheduling

Especially when time is tight, project sponsors sometimes ask their project managers to produce "reverse schedules." They want to know what would have to be done by when to complete their projects "on time." It's a risky process that produces aggressive schedules.

See also Project Management for more related articles.

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