On Managing Life Event Risk

As human beings, we all live lives beyond what we do at work. And even though we make commitments at work to perform certain tasks by certain dates, life events do sometimes intervene. Llife events are "important occasions throughout the lifespan." [APA 2023.1] A critical life event is "an event in life that requires major adjustment and adaptive behavior." Critical life events include "the death of a loved one, divorce, and unemployment." [APA 2023.2] And, certainly, much more. When critical life events occur, we might not be able to honor our commitments in the ways and by the dates we originally promised.

That's how and why critical life events of team members can affect plans for workplace projects and operations. Critical life events are thus a source of risks for workplace plans. And those risks are difficult to manage using conventional risk management tools.

Limitations of conventional risk management approaches

Conventional risk management approaches tend to focus on actions organizations can take to mitigate risks of activities they undertake and understand well. For example, Organization A, offering a new product, might develop a plan to manage the risk of a competitor fielding a similar product within a year of A's offering. The risk manager applies resources to control the expected value of the impact, where expected value is the product of two factors: the probability of a risk event and the cost of that event if it should occur.

Risk management thus emphasizes two activities: (a) monitoring risk event probabilities and suppressing them where possible; and (b) altering plans so as to limit the cost of risk events when/if they do occur.

Both of these Conventional approaches to risk management,
when applied to managing critical life event
risk, can require intrusive investigations
into employees' private livesapproaches to risk management, when applied to managing critical life event risk, can require intrusive investigations into employees' private lives. In some instances, the risk managing organization is legally barred from seeking the information that would be most pertinent to planning for managing the risks of critical life events associated with individual employees.

For example, to estimate the probability of the death of a spouse, knowledge of the medical history of that spouse would be most useful. But asking the employee for such information — or even seeking it by any other means — might be prohibited in the relevant jurisdiction. If so, that prohibition can limit the effectiveness of plans for managing the risk of death of a spouse.

An alternative approach to managing life event risk

An alternative approach for managing the risk of critical life events relies on diversifying the risk portfolio, which is a well-established risk management technique. Applied to the problem of managing critical life event risk, the strategy involves adopting an employee recruiting approach designed to achieve a demographically diverse workforce. For example, by arranging for a wide distribution of ages in the workforce, we can dilute the effects associated with parenting small children, which include distractions, loss of sleep, limited availability for travel, and so on. That same recruitment strategy dilutes the effects of unexpected demands associated with caregiving for aged parents.

This example illustrates the power of demographic diversity relative to age. But the same approach applies for any demographic factor associated with critical life events — marriage, divorce, remarriage, arrests, motor vehicle accidents, surgeries, restraining orders, retirement, deaths of pets, home-buying, relocation, promotions, and so on. Diversity of the employee population dilutes the effects of critical life events.

Last words

The approach based on demographic diversity can be difficult to accept at first. Conventional wisdom dictates that we always seek the best-qualified candidates for positions we fill. Normally, we ignore the effect of such hiring on demographic diversity. The result is that many organizations are carrying unmitigated critical life event risks. They might have highly qualified employees, but their overall performance might be compromised by critical life events.  Top    Next Issue

Are your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Footnotes

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.

This article in its entirety was written by a human being. No machine intelligence was involved in any way.

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:

The Politics of the Critical Path: I

The Critical Path of a project or activity is the sequence of dependent tasks that determine the earliest completion date of the effort. If you're responsible for one of these tasks, you live in a unique political environment.

On the Risk of Undetected Issues: I

In complex projects, things might have gone wrong long before we notice them. Noticing them as early as possible — and addressing them — is almost always advantageous. How can we reduce the incidence of undetected issues?

Unresponsive Suppliers: II

When a project depends on external suppliers for some tasks and materials, supplier performance can affect our ability to meet deadlines. How can communication help us get what we need from unresponsive suppliers?

Seven More Planning Pitfalls: II

Planning teams, like all teams, are susceptible to several patterns of interaction that can lead to counter-productive results. Three of these most relevant to planners are False Consensus, Groupthink, and Shared Information Bias.

Seven More Planning Pitfalls: III

Planning teams, like all teams, are vulnerable to several patterns of interaction that can lead to counter-productive results. Two of these relevant to planners are a cognitive bias called the IKEA Effect, and a systemic bias against realistic estimates of cost and schedule.

See also Project Management and Personal, Team, and Organizational Effectiveness for more related articles.

Forthcoming issues of Point Lookout

Coming September 27: On Working Breaks in Meetings

When we convene a meeting to work a problem, we sometimes find that progress is stalled. Taking a break to allow a subgroup to work part of the problem can be key to finding simple, elegant solutions rapidly. Choosing the subgroup is only the first step. Available here and by RSS on September 27.

And on October 4: Self-Importance and Conversational Narcissism at Work: I

Conversational narcissism is a set of behaviors that participants use to focus the exchange on their own self-interest rather than the shared objective. This post emphasizes the role of these behaviors in advancing a narcissist's sense of self-importance. Available here and by RSS on October 4.

Coaching services

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