Risks and Opportunities

Watching changes (risks and opportunities)

Sometimes these two words are sold as two sides of the same coin.

If this concept could be useful on operational basis (similar management techniques) the strategic approach shall be very different.

While “new” (unspotted) risks are inseparable from the wanted benefits, opportunities shall be framed within the (reviewed) balance between benefits, costs and risks. This process should be integral part of the “Issue Management”. The reason for this choice is based on the need on four arguments:

1. Simpler and stronger method and related techniques can reduce the bureaucracy.
2. Focusing on familiar tools makes available more energy for a thorough analysis of dependencies among various elements of the whole system (or at least the part that has already been delivered).
3. Standardized procedures for evaluating the impact of such modification either on the output (single work-package) or the outcome.
4. The presence of a panel responsible for judging the importance of “issues” offers the right place for the stakeholders’ management, especially when commercial considerations are brought in.

Same scale, different ranges

Any action aiming to change the actual status implicates risks. During the whole project’s life, their number should decrease (when the event that would have triggered the problem has been avoided). The impact, on the outcome, of each risk does not change during the whole project’s life, sometimes it could go beyond it (thinking the relation between the production and its market acceptance).

On the other side of the coin, once the benefits (biggest and most important opportunities) are set and then the major decisions about strategies are taken (e.g. architecture’s elements), both the room and the windows time will decrease each time the outputs are delivered and accepted by the customer.

Managing stakeholders expectations

It requires a certain dose of flexibility. One available tool is based on a carefully managed system based on allowances. When the impending problems need more resources (e.g. time, money, skills or changing strategies), an Issue Management based on (Prince2) “Exception Report” can help everyone involve in the project (from producers to senior managers) to devise a proper response.

The adequacy of the response can only be measured against the reviewed benefits.

The very same system shall be used for opportunities, once they are spotted. Instead of spending energies on devising plans that should deal with any potential problem, the team works in a “ready condition”. Therefore, the Risk (and opportunity) Monitoring will be part of the production culture.

Conclusion

A policy privileging the search of opportunities can seriously hamper the whole project. In an environment where risk management is perceived as a negatively focused activity, at the best dedicated to maintain the status quo, the idea of enabling most of the stakeholders to improve the business could be enticing. However, this introduces the following topic:

how much resources have to be deployed for maintaining the necessary discipline on the agreed targets?

More readings

http://www.betterprojects.net/2009/08/business-requirements-versus.html

http://herdingcats.typepad.com/my_weblog/2009/08/probablistic_ri.html

http://hbswk.hbs.edu/item/6235.html

www1.dau.mil/pubscats/PubsCats/atl/2008_03…/conr_ma08.pdf

“Opportunity is missed by most people because it is dressed in overalls and looks like work.”