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Friday
Apr182008

Risk

I've been thinking a lot about Risk lately.

Increasingly I'm finding the word Risk is more emotive than helpful. This is the case particularly in my professional life, but I'm also finding it holds true in other spheres too.

I'm seeing more and more people, when they hear the word Risk, hear something akin to potential disaster. Events like the recent loss of seven lives in the outdoors simply contribute to this, and it spills into other areas of life too.

Whereas, Risk is simply uncertainty. And Risk Mitigation is simply planning the actions you will take to reduce that uncertainty to an acceptable level.

I'm finding that people understand it quicker if, in Risk discussions, we talk more about moving from uncertainty to certainty.

Professionally I'm currently involved in preparing for four projects - but we simply don't know enough yet to be certain as to the most appropriate approach, how long that might take, and the resources required. In other words there is uncertainty - or risk. None of these projects is potentially going to experience a disaster, but there is uncertainty.

In some cases organisations try to reduce uncertainty by issuing a Request for Proposal (RFP) detailing their requirements. However, my experience is that while RFPs can (sometimes!) be good at articulating functional requirements they are rarely, if ever, good at exposing the true current state, particularly in terms of stakeholder readiness. Accordingly, there is always significant uncertainty as to the appropriate project approach and resourcing required to increase stakeholder readiness to the level required to enable the functional change anticipated.

In the case of the projects I am currently preparing for we are not being subjected to an RFP process. But there is still uncertainty - so we are having to formulate approaches to reduce that uncertainty to a level acceptable to us and our clients.

A typical approach, which we are using in the current cases, is to use an initial scoping and planning phase to increase knowledge of the factors which are currently uncertain - thus reducing uncertainty (risk) to an acceptable level.

The key output of the scoping and planning phase will be the project management plan (project charter) outlining:

  • Scope and Solution
  • Activities, Estimates, Milestones and Deliverables
  • Resources, Project Organisation Structure and Responsibilities
  • Stakeholders and Communication Activity
  • Organisational Alignment Activity
  • Process Alignment Activity
  • Risk Management Plan
  • Assumptions, Constraints and Dependencies
  • Project Processes for Status Reporting, Change Control, Issues and Acceptance

What is your understanding of Risk?

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