Without referring to the an incredible number of websites and documents knocking with that speak about Risk Management, I want to make an attempt to offer a simple view from the perspective of someone who has to control risk regular across major projects. This is certainly real risk management, mitts on.
Obviously, “Risk” and “Risk Management” can have variations the exact same general meaning depending on the circumstances or context that it really is applied, nevertheless in principle, all risk management will follow more or less the identical process.
So, what is a Risk? A risk could be any affect on an expected or planned outcome that changes that outcome. In child-talk, it’s something that could hold you back getting what you want or expect.
Here’s an important note: Risk hasn’t happened yet. If the outcome has now changed on account of a danger “happening” then it’s will no longer a danger, it’s a problem and should be managed differently.
So basically – A danger can be something, anything, which could happen that may impact or change a desired or planned outcome. There are many different ways to state this that, as basic as the reasoning is, it may easily get confusing. Let me give you one example;
“When it rains today then your field trip needs to be cancelled” – the danger is it may rain. The impact is the planned trip will have to be cancelled. Risk Management is recognizing the risk potential analyzing the probability and impact and either mitigating it or preparing alternative options that will permit the first plan to achieve success.
On several of my projects in Asia I’ve had to seriously consider the impact of rain on project outcomes. I used to be on one job in Korea, Seoul, where we possessed a very limited time to advance a banks’ trading office from a classic building that was sold off, to an alternative building. The existing building owner declared bankruptcy and sold from the office block. The newest owner, the federal government, kicked everyone out on short notice. We had 3 months to discover a new building, fit it and move 200 staff including 120 trading positions.
This really tested my teams Risk Management ability. This is a working business, the sole window to maneuver the 200 staff was across a weekend – after trading stopped on Friday evening and before it going on Monday Morning. Do you know what, we experienced a Typhoon heading in, and for people who don’t learn how things are employed in Asia – Typhoons are provided warning signals since they approach from the local authorities.
Each signal indicates a degree of “threat” or possibility of a direct strike. As being the signal rises in strength the threat (and danger to life and property) becomes imminent and public services shut down. Individuals are told to travel home or stay away from the streets and, for a lot of hours to a few days, everything grinds to your halt.
I had a stressful time managing risk by the hour. The decision to roll back the proceed to the previous office or proceed and hope we got all things in prior to the typhoon hit 39devspky a 15 minute review, every 15 minutes for the first 1 / 2 of the weekend. That had been management du risque like I never was required to manage before. Risk Management is essential to project work.
So, the meaning of “Exactly what is a Risk” should, I really hope, be graphically clear now..? Risk Management is the process of managing risk since it pertains to specific circumstances. The methods, tools and processes accustomed to manage risk are quite pragmatic and common-sense. But we all know that there’s no such thing as “Common Sense” so the simplest way to have a consistent framework around managing risk is usually to learn some best practices according to industry proven templates and methodologies.
I’m not here to push one methodology or best practice against another. We have my personal preferences based upon my industry and experience having said that i know and possess seen all kinds of other project managers use varying techniques and tools in Risk Management, all valid and many of them effective at performing.
Within a follow up article I am going to talk more specifically about Project Risk Management. I’ll share some templates and examples and hopefully stir up some discussions too. There’s no one right way to do Risk Management there is however a consistent framework that needs to be followed and there are many great industry standards in Risk Management space.