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Latest Thoughts in Risk Management (or What I Learned from going to the Risk Symposium)

Having just attended the well-attended PMI Risk Symposium a couple of weeks ago, this topic is so appropriate for our current economic environment.  Many of you are doing some type of Risk Management already.  What I hope to do is to provoke your thoughts that could help increase your project or program success.

There were SO MANY great insights and demonstrations in the application and benefits of applying Risk Management (RM)!  The four keynote speakers covered topics that challenged my beliefs about RM and where it is going.

The topics I’ll be covering are highlights from the Symposium presentations:

  1. How clarity in language of risk is key contributor to implementing Risk Management (from Felicia Hong)
  2. Starting and using a Risk Register (from Elden Jones)
  3. Project Opportunities and Risks (from Tom Kendrick)
  4. The Paradox of Risk Management (from Payson Hall)
  5. Risk on the Technology Treadmill (from Esteri Hillman)

iStock_000007836244Use the right language: Communicate, Communicate, Communicate!

Let’s start with concepts around the importance of defining a Risk-Based Management Language, so deftly described by Felicia Hong from BAE.

“Risk”, the word, is defined by multiple dictionaries (pick any one you like!) as being associated with the possibility of loss or injury, namely “BAD NEWS”.

By using a “language” that contain risk related keywords and contextual definitions, the “BAD NEWS” evolves to “Warning – this is what we could do to eliminate or minimize the risk”.  The stakeholder then understands that they could help increase the possibility of project success.

Some keywords that are defined in her approach:

  • Risk: an event or series of events that might have a negative impact on the project baseline.  The probability of occurrence is >0% and <100%.
  • Opportunity: an event or series of events that might have a positive impact on the project baseline.  The probability of occurrence is >0% and <100%.
  • Issue: Has or is inevitable that it will happen and negative impact is expected
  • Variability of the cost and schedule in not Risk
  • Probability: the likelihood of the risk occurring
  • Impact:  The measurement of a risk effect, expressed quantitatively (such as schedule delay by x months or $$ increase in cost)

Another aspect of her Risk Management Language is using a consistent format in describing the risk.  The format, that is reader friendly and includes the cause, is:

IF <risk condition> DUE TO … <cause>, THEN <effect / impact>

For example, IF the lead engineer is overextended DUE TO conflicting project assignments and schedule, THEN the next customer review will be delayed by 2 weeks.

A couple of gems from her “Ten Commandments of Risk”:

  • Understand your project Risk Tolerance level
  • State risks in context of objectives
  • Keep Stakeholders’ interests in mind – WIIFM principle (What’s in it for me?)

Thanks Felicia for stressing that communication is more than a set of words on a powerpoint slide!

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About the Author

Terrie Mui is an innovative project and program manager with over 20 years of experience developing and launching high tech products for the aerospace, scientific and internet industries. With the ability to build teams in the best and worst of situation, she uses common sense leadership principles useful for start-ups and established businesses. Having managed mulit-million programs from proposal to delivery, she has built cross-functional teams that actually work together and have fun at the same time. Terrie holds a M.S. from University of Southern California in Industrial & Systems Engineer and a BSME from Loyola Marymount University. A certified PMP since 1999, she is also a Stanford Certified Project Manager (SCPM) with a focus on implementing Portfolio and Program Management best practices. She is an active member in PMI since 1999 and was 2011 President/CEO of the Silicon Valley chapter. Her current challenge of being principal of Project-Catalysts Consulting has her focusing on helping companies build successful teams meet their challenging objectives in a constantly changing environment, while still having some fun doing it!
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2 Responses to “Latest Thoughts in Risk Management (or What I Learned from going to the Risk Symposium)”

  1. Nice synopsis, Terrie.

    In my experience, defining the risky elements of a project and creating plans to mitigate things that can go wrong is the weakest element of MOST (dare I say, ‘ALL’) project management plans. Who has time?

    As you mention, it is very important to use language and examples everyone (stakeholders and project team members) can understand. Otherwise, you won’t get the support you need to put contingencies in place.

    It would be interesting to hear some real-life examples from our readers where critical project risks were anticipated and quantified, and where contingency plans were created that were actually used effectively.

    For me, living in California, a major risk to a project is an earthquake. How many of you have planned for that? In fact, how many of my fellow Californians have planned for that in their personal lives? Well? I thought so. So get to it, man!

  2. Wow, thanks so much for the recap. Very well written. Couldn’t have done better myself.

    And yes, it is so true that good communication is so crucial in our ability to succeed, especially more so in the risk management area of discipline.

    Thanks again!

    Felicia

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