
Rick Piltz (1943-2014), former senior associate in the U.S. Climate Change Science Program in the administration of President George W. Bush. He resigned his position in March, 2005, over political interference in the program. In early June, the New York Times published a story describing how Philip Cooney, chief of staff for the White House Council on Environmental Quality, had revised reports of the Climate Change Science Program to, in effect, sow doubt about the science of climate change. Following publication, Mr. Cooney resigned and accepted a position at ExxonMobil. Mr. Cooney had been engaged in tactics that support risk denial, where the risks in question are the risks associated with climate change.
Photo by Nicky Sundt courtesy GlobalChange.gov.
Discussing risk in general terms is always difficult, because many professions have their own ways of thinking about it. For now, let's regard risk as the chance of losing an asset. We measure the chance as a probability. We measure the asset in units of value.
If the probability of loss in a given time interval is P, and the value of the asset is V, the expected value of loss in that time interval is PV. In a large number of identical trials, our average loss per trial would be PV.
Sound decisions about enterprise resources do consider risk. For example, in estimating a project budget, we might consider the possibility that one of our suppliers might deliver a subsystem three months late. To manage this risk, we might reserve resources to deal with it if it occurs. If the cost of dealing with this event is V, and the probability of it occurring is P, then the reserves required are PV.
That's one example of a strategy for dealing with a risk. Fortunately, it isn't the only strategy available, and in many cases we can do much better. Here's Part I of a summary of the possible strategic options for dealing with risk, emphasizing ineffective (but very common) approaches.
- Denial
- Those in denial are those who reject the reality of the risk event.
- Slogan: "That'll never happen. You're such a worrier!"
- Advantage: Denial lets Those in denial are those
who reject the reality
of the risk eventus feel that preparation is unnecessary, because there's no risk. It can be a comforting illusion, especially for those reluctant to allocate resources to managing risk. - Danger: If the risk event occurs, we're unprepared. Worse, we can become disoriented when we find that our view of the world is fiction.
- Shock
- Shock happens when we're blindsided by the unexpected.
- Slogan: "OMG, nobody could've anticipated that."
- Advantage: If the unexpected doesn't happen, we can remain in a state of blissful ignorance.
- Danger: If the unexpected happens too late for us to take remedial action, disaster is possible.
- Acceptance
- Acceptance is the strategy for those who don't want to prepare.
- Slogan: "That might happen. We'll deal with it then."
- Advantage: It requires no advance resource allocation. If the risk event doesn't occur, no resources are expended.
- Danger: It can lead us to believe that we have less need for resources than we actually do. Acceptance is a prudent strategy only when PV is very small.
- Chaos
- This approach happens when we're so distracted by immediate events that we cannot plan for future risks.
- Slogan: "Heavens! We've been meaning to plan for that. We clean forgot!"
- Advantage: By focusing our resources elsewhere, we do accomplish some tasks. Without a risk plan, allocating resources to risk management becomes unnecessary.
- Danger: If risk events arrive before we can allocate resources to risk planning, the risk response can be inadequate, and full-scale disaster is possible.
We'll continue next time with three more risk management strategies. Next issue in this series
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Related articles
More articles on Project Management:
Projects as Proxy Targets: I
- Some projects have detractors so determined to prevent project success that there's very little they
won't do to create conditions for failure. Here's Part I of a catalog of tactics they use.
Anticipating Absence: Quarantine and Isolation
- When the pandemic compels some knowledge workers to quarantine or isolate, we tend to treat them as
if they were totally unavailable. But if they're willing and able to work, even part-time, they might
be able to continue to contribute. To make this happen, work out conditions in advance.
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.
Should We Do This?
- Answering the question, "Should we do this?" is among the more difficult decisions organizational
leaders must make. Weinberger's Six Tests provide a framework for making these decisions. Careful application
of the framework can prevent disasters.
Rescheduling Collaborative Work
- Rescheduling is what we do when the schedule we have now is so desperately unachievable that we must
let go of it because when we look at it we can no longer decide whether to laugh or cry. The fear is
that the new schedule might come to the same end.
See also Project Management and Project Management for more related articles.
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And on June 11: More Things I've Learned Along the Way: VI
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