I attended another webinar called Managing Risks in Projects led by James Lewis. He started the webinar off by posting some pictures of a car falling into a river and then a truck trying to take the car out of the river only for the truck to fall into the river as well. The last picture showed a bigger truck helping both the car and the smaller truck out of the river.
My interpretation of this is if the strategy of getting the car out of the river was planned with risks in mind; the person in charge, does not necessarily have to be a project manager, would know the risks of sending a small truck out to save a car of the same weight. Of course the small truck will fall into the water. In looking at the picture, the angle of the truck was not correct. The truck was at a 30 degree angle with no where to put the truck. Why didn’t the truck driver move his truck at a different angle? Or even move his truck back in order to make room for the car?
Pictures paint a thousand words and I can go on and on about what I think the situation was all about. Only the people involved knew what happened and if they followed a strategy or not.
The definition of risk is the potential that a chosen action or activity including the choice of inaction will lead to a loss – an undesirable outcome. Potential losses themselves may also be called “risks”. Almost any human endeavor carries some risk, but some are much more risky than others.
The definition of risk management is the identification, assessment, and prioritization of risks, followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.
In the webinar, James Lewis mentioned the risk management process is:
The first process of risk management is identify. In the identification stage, a project manager will ask, “What could go wrong?” The second process is assessing risk. In order to assess risk, you estimate three things:
1.) What is the probability that the event may occur?
2.) What will be the severity of the impact if it does occur?
3.) Can you detect it before it happens?
After a project manager has assessed a risk in a project, the responses to risk may vary. Some responses may be mitigate and deal with the situation, accommodate and accept the risk, transfer the risk , or ignore the risk, which can be very dangerous. A project manager must avoid or prevent risk from happening to a project.
Risks can be categorized as internal or external factors, psychological biases, team dynamics, or performance of people. Some examples of internal factors are:
- lack of resources
- systems: measurement reward
- lack of management support
- changing priorities
- not using lessons learned
- dictating all project constraints
- unrealistic targets
- using ballpark estimates to approve projects
- stakeholder pressures
Psychological biases are:
- actor/observer differences
- anchoring effect
- senior management not accepting reality
- considering risks unimportant
- going full speed ahead without stopping to think if doing the right thing
- unquestioned assumptions
Risk for team dynamics include:
- risky shift
- poor communication
- lack of cooperation
- hidden agendas
- personality conflicts
- incompetent project manager or team member
- estimating errors
- poor execution of the plan
- failing to follow the plan
- lack of “people skills” of key people
- failing to manage risks
- lack of leadership by project manager
- project manager has no authority