Ten Approaches to Managing Project Risks: II

We began our catalog of risk management strategies last time, exploring Denial, Shock, Acceptance, and Chaos. None of those four are particularly effective with respect to achieving our goals in the context of adversity. One more ineffective strategy remains to be explored before we examine some more effective approaches.

Procrastination

This strategy, usually executed unconsciously, involves repeated delay of planning to address acknowledged risks. We just can't seem to find time to sit down and plan for risks.

Slogan: "Yes, we have to plan for that risk, but we're too busy right now. Maybe tomorrow."

Advantage: Deferring planning enables the procrastinator to defer acknowledging the cost of managing risk, which can be helpful in persuading decision-makers to undertake or continue the effort, because its full cost is unrecognized. Procrastinating also enables the procrastinator to claim that planning is "in progress" when actually it isn't.

Danger: Procrastinating leads to a perception that the resources at hand are sufficient, when they might be wholly inadequate. It can also lead to delays so great that the organization can become unable to prepare for the risk prior to the actual risk event.

Let's look now at strategies that actually facilitate progress.

Avoidance

Avoidance is the choice to eliminate the possibility of loss by changing what you're doing. Other losses might happen, but not that one. For example, if we include an overview of the Marigold project in our presentation, we risk being asked about Issue 18, for which we have no answers yet. To avoid that risk, we decide not to provide a general overview of Marigold. Instead we'll discuss only Issue 17, which is almost resolved.

Slogan: "If we use this other design instead, we can avoid that risk."

Advantage: Finding Sometimes we can be so averse
to risk that we convince ourselves
that a risk-avoiding alternative
approach can achieve our goals,
when it actually cannota clever alternative to what we planned originally, and thereby avoiding a risk we would have borne under the original approach, can be both elegant and effective.

Danger: Sometimes we can be so averse to risk that we convince ourselves that a risk-avoiding alternative approach can achieve our goals, when it actually cannot.

Limitation

Limitation strategies reduce the probability of the risk event occurring, or reduce the size of the loss if it does occur, or both. Using limitation, we make the risk acceptable by reducing the expected value of the loss.

Slogan: "We can reduce the probability of that risk (or the cost of that risk) if we do this."

Advantage: The expected value of the loss associated with a risk event is the product PV, where P is the probability of the occurrence and V is the value lost. If we can reduce the expected value enough, we can proceed with confidence, even if the risk event occurs.

Danger: Estimating probabilities is notoriously difficult. If we're wrong in our estimates, and the risk event occurs, we could be in trouble.

We'll continue next time with the last three of our risk management strategies. First in this series | Next in this series  Top    Next Issue

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One often-neglected project risk is the risk of inaccurately reported status. That shouldn't be surprising, because we often fail to report the status of the project's risks, as well. What can we do to better manage status risk and risk status?

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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?

Unresponsive Suppliers: III

When suppliers have a customer orientation, we can usually depend on them. But government suppliers are a special case.

See also Project Management and Devious Political Tactics for more related articles.

Forthcoming issues of Point Lookout

Coming July 18: High Falutin' Goofy Talk: III

Workplace speech and writing sometimes strays into the land of pretentious but overused business phrases, which I like to call high falutin' goofy talk. We use these phrases with perhaps less thought than they deserve, because they can be trite or can evoke indecorous images. Here's Part III of a collection of phrases and images to avoid. Available here and by RSS on July 18.

And on July 25: Exploiting Functional Fixedness: II

A cognitive bias called functional fixedness causes difficulty in recognizing new uses for familiar things. It also makes for difficulty in recognizing devious uses of everyday behaviors. Here's Part II of a catalog of deviousness based on functional fixedness. Available here and by RSS on July 25.

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