Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 10, Issue 11;   March 17, 2010: Risk Management Risk: I

Risk Management Risk: I

by

Risk Management Risk is the risk that a particular risk management plan is deficient. It's often overlooked, and therefore often unmitigated. We can reduce this risk by applying some simple procedures.
Example of an unsecured driver-side floor mat trapping the accelerator pedal in a 2007 Toyota Lexus ES350

Example of an unsecured driver-side floor mat trapping the accelerator pedal in a 2007 Toyota Lexus ES350. We don't yet know much about the root cause of quality problems in recent models of vehicles designed and manufactured by Toyota, but we can already evaluate the company's public response to the reports of problems. Briefly, their response has been erratic. In part, this might be due to the company's inexperience with defects. Their record has been so good, and recalls so few, that they might have had an organizational blind spot relating to the risk of public exposure of defects in their products. Undoubtedly, this blind spot is now being corrected, albeit in a manner most unpleasant for all concerned. Photo courtesy U.S. National Highway Traffic Safety Administration.

Risk plans are rarely perfect. For complex projects, unanticipated risk will almost certainly materialize. We can deal with this risk — I'll call it risk management risk — if we adopt some simple practices. Let's begin with some examples of organizational and political risks.

Organizational blind spots
Organizational risk management asset bases usually consist of previously developed risk plans and risk plan elements, documented risk plan development procedures, and personal experiences.
Although referring to these assets might uncover risks that any particular risk manager might not otherwise consider, relying on the asset base probably won't uncover risks not included there. Since continuous organizational change almost certainly exposes the organization to risks never before seen, these asset bases have blind spots.
To limit these blind spots, analyze the results of retrospectives to determine what risks were unanticipated. They provide clues to the location of the organization's blind spots.
Organizational political correctness
In general discourse, political correctness requires that we shape our statements and behavior — if not our opinions — to conform to a generally accepted ideological standard. Organizational political correctness provides an analogous constraint relative to the ideology and views of the organization.
Organizational Organizational political correctness
can limit the ability of risk managers
to address significant risks
political correctness can limit the ability of risk managers to address significant risks, when even discussing such risks calls into question organizational beliefs, or the beliefs of those who have internal political power.
If a common theme appears among unanticipated risks, if those risks are evident to many, and if the same risks materialize across many projects, organizational political correctness could be a cause. Organizational culture change is required to address this risk.
Political risk
The organizational value of any project is determined, in part, by the political clout of its advocates. How an organization values a project can present risks to it through resource allocation, schedule, and budget.
Although these risks are widely understood, talking about them openly and planning for them in writing is often difficult, for reasons far beyond organizational political correctness. For the politically weak project, committing to writing and review any plan to deal with political risks simply provides a roadmap to rival projects if they are politically stronger. Such a risk plan is often effectively countered before it can be implemented. In some cases, it might even be forbidden. This effect is especially pronounced if a state of toxic conflict persists between the departments, leaders, or champions of the two projects.
Two factors suggest the presence of political risk. First is the absence of any explicit mention of political risk from the risk plans of politically weak projects. A second indicator can be changes in the execution plan of politically stronger projects, especially following publication of the risk plan of a politically weaker project.

In Part II, we'll examine risk dynamics and risk interactions.  Next in this series Go to top Top  Next issue: Risk Management Risk: II  Next Issue

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