The Risk Doctor's Cures for Common Risk Ailments
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About this ebook
Using the medical metaphor, Dr. Hillson prescribes treatment for serious issues that can lead to project or business failure. These common risk management ailments include risk blindness, risk amnesia, risk muteness, risk obesity, risk anorexia, risk depression, and risk myopia.
Proper risk management is essential to project and business success but is often misunderstood and inappropriately applied at all levels of the organization. This book makes the basics comprehensible and the application of sound risk management workable.
Follow The Risk Doctor's recommended treatment plan and begin a fast recovery from risk ailments that have troubled your projects and your business—and look forward to a future filled with the rewards of a healthy approach to risk management!
David Hillson PhD, PMP
Dr. David Hillson, PMI Fellow, HonFAPM, FIRM, CMgr, FCMI, FRSA, widely known as The Risk Doctor, is an international risk management consultant and director of The Risk Doctor Partnership.He has received many awards for his significant and sustained contributions to the risk discipline, including IRM’s Risk Personality of the Year and PMI’s David I. Cleland Literature Award.
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The Risk Doctor's Cures for Common Risk Ailments - David Hillson PhD, PMP
success.
AILMENT ONE
Risk Blindness
"R isk blindness is the condition of being unaware of the existence of risk.
Seeing is believing," so when others mention risk, a risk-blind person or organization doesn’t understand what they are talking about. They believe that people who claim to see risk are delusional, shadow-boxing, and fighting imaginary foes.
A related condition, voluntary risk blindness, is suffered by those who deny the existence of risk even though they are fully aware of it. There are none so blind as those who will not see
: Organizations or project teams that choose to wear a blindfold or risk blinders are deliberately acting as if they cannot see risk. This ailment has similar symptoms and treatment options to genuine risk blindness.
DIAGNOSIS/SYMPTOMS
When asked what they believe to be their biggest current risk, people suffering from risk blindness tend to reply I don’t know
—which in effect is their biggest current risk! A senior Royal Navy admiral was notorious for asking everyone he met when he visited a ship: What are your top three risks and what are you doing about them?
Any officer unable to answer was in trouble.
Every organization is exposed to risk, with a wide range of uncertainties arising both internally and externally. All projects are unique and complex undertakings that deliver change through people, operating within a series of constraints based on a set of assumptions and dependencies. Risk comes from a variety of sources, including technical, commercial, management, and external. To be blind to risk is to deny reality. There is simply no such thing as a zero-risk project or a risk-free organization.
How can we know if our organization or project team is risk-blind? A number of diagnostic characteristics indicate risk blindness (see Figure 1-1). Each symptom is a direct result of the underlying condition, but they are also linked to each other in a self-reinforcing cycle. The symptoms produce an internally consistent and stable situation, making it particularly difficult for the risk-blind organization or project to recognize its own disability. However, the linked nature of risk blindness symptoms also offers an opportunity for treatment, since breaking the cycle in any one place can result in significant improvement.
FIGURE 1-1: Diagnostic Symptoms of Risk Blindness
No risk process
The first and most obvious symptom of risk blindness is that no risk process is in place. Why waste time on risk workshops or review meetings, why commit precious resources to risk management, if there is no risk to manage? If you ask to see a risk register, the risk-blind organization or project will tell you that they don’t have one because they don’t need it. A risk register records hypothetical things that could possibly go wrong in some imaginary future, whereas they are focusing on doing things right first time, every time in the present. They don’t have time to worry about things that will never happen.
Macho management
A macho management style sees the need for a risk process as a sign of weakness and an admission of the possibility of failure. True leaders don’t need to manage risk; they are warriors, not worriers. They pioneer and innovate, forging ahead toward the goal and overcoming anything that stands in their way. Anyone who points out the possibility of future risks is told to focus on the task at hand and stop worrying.
Those who identify risk might even be regarded as delusional, imagining things that will never happen. They might be characterized as negative,
demotivating others and distracting them from today’s challenges by raising the spectre of an uncertain future. Worst of all is when these scaremongers ask for resources to be spent today to prevent or minimize possible problems tomorrow.
Surprises happen
The macho management aspect of risk blindness is bound to cause problems. The truth is that risk is out there, for every organization and all projects. In every field of human endeavor, wherever we are seeking to do something worth doing, there are uncertainties that matter—future events and circumstances that could have an effect on our ability to achieve our objectives. Denying the existence of risk doesn’t make it go away; it merely prevents us from seeing things sufficiently in advance to allow us to respond appropriately. Ignorance is no protection from the effects of risk. Risk-blind people, teams, and organizations are likely to encounter the unexpected—and to be surprised when they do.
Surprises will have two different types of effect, arising from the dual nature of risk as threat and opportunity:
• Threats that could have been avoided or minimized if they had been seen in advance will turn into problems or issues. Unnecessary delays and cost overruns will occur, waste and rework will increase, value and reputation will be degraded, and clients and customers will be disappointed.
• Potential benefits may be spotted too late to be captured or consolidated. A proactive risk process can identify opportunities in advance and allow them to be maximized and exploited. But a risk-blind organization or project will be unaware of these possibilities to work faster, smarter, or cheaper and will therefore miss the chance to save time, save money, improve productivity, enhance competitive advantage, and innovate.
Firefighting and crisis management
The inevitable result of a high number of surprises for the risk-blind organization or project is the need to deal with the effects of unforeseen risks. A classic symptom of risk blindness is a high level of firefighting, spending time and effort addressing the impacts of avoidable threats that turned into problems and recovering from missed opportunities that should have been captured. For projects, this can mean replanning, crashing the schedule, reallocating scarce resources, revising milestones, and adjusting stakeholder expectations. At the organizational level, this manifests as crisis management, with frequent emergency meetings of senior managers and executives trying to figure out how this unwelcome situation could have arisen and what they can do to limit the damage.
Reacting, not responding
The prevalence of firefighting produces a further diagnostic symptom that is common in the risk-blind: reacting rather than responding. Instead of taking time to consider the situation dispassionately, the organization or project is forced into dealing with it quickly, without sufficient time to think about it. Reaction relies on instinct and gut. Response, in contrast, takes longer and requires more careful thought. Because no risk process is in place to give early warning of possible risks ahead, little or no time is available to develop a considered response in advance of a threat’s turning into a problem or an opportunity passing