Risks are (measurable) future uncertainties that influence the project’s output.

Issues are already happened facts that reduce the project’s benefits. At the best, in terms of decreasing the available resources; those put away for dealing with the risks’ consequences.

Risks are “potential” issues. The formers, if not properly dealt with, can generate the latter. Once [...]]]>

Watertight bulkhead

Risks are (measurable) future uncertainties that influence the project’s output.

Issues are already happened facts that reduce the project’s benefits. At the best, in terms of decreasing the available resources; those put away for dealing with the risks’ consequences.

Risks are “potential” issues. The formers, if not properly dealt with, can generate the latter. Once it has happened, the issue shall be managed with specific techniques, then they will be registered as “Learned Lessons”.

Properly sterilized of any chance of “pointing the finger”, they will be “dissected” in the following elements:

1. Nature: in which area has occurred the event?
2. Source (root cause) understanding the specific scenario (methods, conditions  and their application).
3. Event: what has triggered the problem .
4. Likelihood: how many similar situations has escaped the problems?
5. Impact: which type of resources were required for avoiding/limiting the damages.
6. Which has been the winning strategy to reduce the damages (e.g. hiring an expert, removing the clear and unique/major cause of the problem, improving the needed skills).

These four elements are needed for improving the efficiency of the Risk Management.

Nature

The importance (impact) of risks depends upon the project’s scope. It could range from delivery time to performances or costs. Varying the importance imposes different strategies, for example:

1. Establishing the threshold’s value.
2. The specific resources dedicated for setting and monitoring the trigger
3. The kind of action to be used for reducing the impact

Source

Understanding the surrounding conditions which brought that effect has the same value as finding the cause of it.Like an explosion, the most important factor remains the presence and quantity of inflammable materials.

Event

This element does not vary so much. However, it is extremely important to understand and clearly stated the specific reason that created the problem. This requires to frame the action (or the lack of it) in the proper scenario.

Likelihood

It is just a figure, usually produced by math tools. This number is strictly related to the estimations – especially in the way these are worked out.

Impact

How much “money” did total the damage? From the answer, it would be easier setting the weight of the “potential” damage on the budget.

Winning strategies

The result shall be chosen among these elements:

• Avoidance
• Mitigation
• Transference
• Acceptance

The limits of crises management

When the risk has been actualized, most of the available resources are absorbed by the efforts to limit the damages. This reduces the range of options, either for the sense of urgency or lack of solutions obtainable within short time.

Fire-fighting is an activity that could be emotionally rewarding, a sense of heroism can pervade the whole team. This could increase the sense of cohesion, that will be paid with a high price. Gung-Ho attitude in a commercial enterprise could seriously reduce the ability to deal with other stakeholders (to be perceived as enemies).

Conclusion

Risk Management is a fundamental part of the Project/Program Management. Instead of thinking in terms of silos, it is better to reason using “watertight bulkheads” method. Once the crisis has been solved, the issue shall be sanitized and each of its parts, used for improving the management of risk.

“Take calculated risks. That is quite different from being rash.”