May 28, 2008	Volume 8, Issue 22
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Managing Risk Revision

by Rick Brenner

Prudent risk management begins by accepting the possibility that unpleasant events might actually happen. But when organizations try to achieve goals that are a bit out of reach, they're often tempted to stretch resources by revising or denying risks. Here's a tactic for managing risk revision.

o manage risks properly, we must allocate resources to implement a risk management plan. Some resources must be allocated in advance of anticipated risk events, and some must be held in reserve "just in case."

Many organizations have difficulty allocating these resources, especially when resources are thin and risks haven't yet materialized. The temptation to hope that all will go well can lead some to attempt projects with insufficient reserves for risks. And it can lead others to deny that specific risks can ever occur.

For example, despite decades of widely accepted predictions, the U.S. government failed to provide adequate resources to New Orleans for hurricane-induced flood risk mitigation and planning.

In the project environment, at best, project managers or risk officers identify risks and propose resources to mitigate them. Project sponsors and organizational management then review these proposals for sufficiency and reasonableness. They negotiate with the project staff as necessary, and then they allocate appropriate resources for risk mitigation and management.

In many organizations, things rarely work that way. Organizations commit themselves to risk plans that amount to little more than naïve hopes and wishes for the best. How does this happen?

In some cases, the available resources cannot cover all identified risks unless everything breaks favorably. When someone identifies a risk that is expensive to manage, risk revision, exclusion, or denial enables those involved to commit to the effort despite resource shortages. When this happens, risks that do materialize can threaten the project — or worse, threaten the enterprise.

What can organizations do to manage risk revision?

One approach involves adding to the project plan an Appendix of Revised or Excluded Risks — risks that someone proposed, but which were edited before inclusion in the risk plan, or excluded altogether. For each revised risk, the appendix includes the original proposed risk, a revision history with dates, the arguments in favor of and against such revisions, and the names of all involved in each revision decision. The Appendix of Revised or Excluded Risks serves several purposes.

Audit trail

If the organization someday decides how particular risk types are to be addressed, the Appendix becomes a useful tool to help project teams bring their projects into compliance.

Deterrence

When available resources
can't cover all identified
risks, we sometimes
revise the risks

To whatever extent organizational politics or intimidation play any role in risk revision or exclusion, the knowledge that revision decisions will be recorded in the Appendix might deter some intimidators or some who abuse political power to achieve their ends.

Support for organizational learning

The Appendix could provide useful data for project retrospectives, or even earlier, if trouble does appear during the project's execution.

If you think risk revision and denial aren't happening in your organization, you might want to add that observation to your Appendix of Revised or Excluded Risks.  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.

Make a Project Family Album

Like a traditional family album, a project family album has pictures of people, places, and events. It builds connections, helps tie the team together, and it can be as much fun to look through as it is to create.

Are You Changing Tactics or Moving the Goal Posts?

When we make a mid-course correction in a project, we're usually responding to a newly uncovered difficulty that requires a change in tactics. Sometimes, we can't resist the temptation to change the goals of the project at the same time. And that can be a big mistake.

Seeing Through the Fog

When projects founder, we're often shocked — we thought everything was moving along smoothly. Sometimes, with the benefit of hindsight, we can see that we had — or could have had — enough information to determine that trouble was ahead. Somehow it was obscured by fog. How can we get better at seeing through the fog?

Team Thrills

Occasionally we have the experience of belonging to a great team. Thrilling as it is, the experience is rare. How can we make it happen more often?

See also Project Management and Workplace Politics for more related articles.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact me for details at rbrenner@ChacoCanyon.com or (617) 491-6289, or toll-free in the continental US at (866) 378-5470.

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Public seminars

Person-to-Person Communication for Project Managers

When we talk, listen, send or read emails, read or write memos, or when we leave or listen to voice mail messages, we're communicating person-to-person. And whenever we communicate person-to-person, we risk being misunderstood, offending others, feeling hurt, and being confused. There are so many ways for things to go wrong that we could never learn how to fix all the problems. A more effective approach avoids problems altogether, or at least minimizes their occurrence. In this very interactive program you'll learn a model of inter-personal communications that can help you stay out of the ditch. In those moments of intense involvement, when we're most likely to slip, you'll have a new tool to use to keep things constructive. Read more about this program. Here are some upcoming dates for this program:

• Download to
  your calendarThe Machine Shed, 11151 Hickman Road, Urbandale, IA 50322: February 16, Breakfast Meeting, Central Iowa Chapter of The Project Management Institute. Register now.
   
• Download to
  your calendarThe Hotel Fort Des Moines, 1000 Walnut Street, Des Moines, Iowa 50309: February 16, Lunch Meeting, Central Iowa Chapter of The Project Management Institute. Register now.
   
• Houston, Texas: May 8, Monthly Meeting, Houston Chapter of the Project Management Institute.
   
• Houston, Texas: May 9, Monthly Meeting, Houston Chapter of the Project Management Institute.
   

The Race to the South Pole: The Power of Agile Development

On 14 December 1911, four men led by Roald Amundsen reached the South Pole. Thirty-five days later, Robert F. Scott and four others followed. Amundsen had won the race to the pole. Amundsen's party returned to base on 26 January 1912. Scott's party perished. As historical drama, why this happened is interesting enough. Lessons abound. Among the more important lessons are those that demonstrate the power of the agile approach to project management and product development. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarSt. George Banquet Hall, Kitchener, Ontario: March 6, Dinner Meeting, Canada's Technology Triangle Chapter of the Project Management Institute. Register now.
   

Human-Centered Risk Management

Most of us can assess technological risks, but risks related to human behavior tend to resist our best efforts. This session provides a framework for evaluating risks related to the behavior of individuals, teams, organizations and people generally. Human-centered risk differs from technological or market risk, because objective evaluation requires acknowledging personal and organizational limitations and failures. Since some of those limitations and failures might apply to the people assessing the risks, or to their superiors, there's a tendency to deny them or to explain them away. Our approach examines capability, organization, context, risk mitigation, and workplace politics. It has tools for guiding the assessment and management of human-centered risk, and we show how to extend these tools to suit your situation. You'll learn how to identify sources of risk in human behavior; recognize systemic and individual barriers to acknowledging risk; assess the effects of organizational turbulence; determine the risk associated with inappropriate internal risk transfer; estimate the effects of team dysfunction, toxic conflict and turnover; and measure the impact of workplace politics. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarMITRE, in Bedford, Massachusetts: March 20, Monthly Meeting, Boston SPIN. Register now.
   

The Race to the South Pole: Ten Lessons for Project Managers

On 14 December 1911, four men led by Roald Amundsen reached the South Pole. Thirty-five days later, Robert F. Scott and four others followed. Amundsen had won the race to the pole. Amundsen's party returned to base on 26 January 1912. Scott's party perished. As historical drama, why this happened is interesting enough, but to project managers, the story is fascinating. Lessons abound. Read more about this program. Here's an upcoming date for this program:

• Columbia, Missouri: May 17, Full-Day Workshop, Mid Missouri Chapter of the Project Management Institute.
   

Project Management in Fluid Environments

Most people now work in environments that can best be characterized as fluid, because they're subject to continual change. We never know what's coming next. In such environments, managing — teams, projects, groups, departments, or the enterprise — often entails moving from surprise to surprise while somehow staying almost on track. It's a nerve-wracking existence. This program provides numerous tools that help project managers who work in fluid environments. Read more about this program. Here's an upcoming date for this program:

• Columbia, Missouri: May 17, Monthly Meeting, Mid Missouri Chapter of the Project Management Institute.
   

The Politics of Meetings for People Who Hate Politics

There's a lot more to running an effective meeting than having the right room, the right equipment, and the right people. With meetings, the whole really is more than the sum of its parts. How the parts interact with each other and with external elements is as important as the parts themselves. And those interactions are the essence of politics for meetings. This program explores techniques for leading meetings that are based on understanding political interactions, and using that knowledge effectively to meet organizational goals. Read more about this program. Here's an upcoming date for this program:

• Rochester, New York: May 24, Professional Development Day, Rochester Chapter of the Project Management Institute.