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Copyright © 2009 David Hillson/Risk Doctor Limited

Project Risk Management:WHERE NEXT?

© 2003-9 David Hillson/Risk Doctor Limited, Slide 1

Project risk management:

Where next ?

Project risk Project risk

management:management:

Where next ?Where next ?

Dr David HillsonDr David HillsonThe Risk DoctorThe Risk Doctor


Where are we now?

�Standards

�Professional bodies

�Body of knowledge

�Infrastructure

�Becoming a profession?




What is a “profession” ?

�Different from trade or craft

�Characteristics:

�Accepted standards

�Defined body of knowledge

�Entry qualifications/licensing

�Ethical code of practice

�Dedicated to public good

�Public recognition and trust


Example professions

�Classical:

�Legal

�Clerical

�Medical

�Modern:

�Teacher ?

�Plumber ?

�Footballer ? (foul)




Risk management –Principles & guidelines on implementation


Project Risk Management

Specific Interest Group





Certified Practising Risk Manager (CPRM)

Certified Risk Management Technician (CRMT)

International Certificate in Risk Management

International Diploma in Risk Management

M_o_R Foundation Qualification

M_o_R Practitioner Qualification

PMI Risk Management Professional (PMI-RMPSM )

Professional Risk Manager (PRM)

Project Risk Management Certificates (Levels 1 & 2)




Is risk management a profession?

�Characteristics:

�Accepted standards

�Defined body of knowledge

�Entry qualifications/licensing

�Ethical code of practice

�Dedicated to public good

�Public recognition and trust

��

��

��

��

��

?


Today’s position

�Risk management is

�Widely accepted

�Consensus on main aspects

�Commonly practised

�All industries, all project types and sizes, most countries

�So all sorted then?




0%

10%

20%

30%

40%

50%

60%

1996 1998 2000 2002 2004 2006 2009

Succeeded

Failed

Challenged

Standish Group CHAOS data

24% Failed44% Challenged32% Succeeded


Risk management …

�… THE key driver for project success

�Because :

�Life (and projects) are risky – must be managed

�Emphasis on objectives

�Proactive not reactive

�Creates space to manage

�Ensures consensus & focus

�BUT projects fail REPEATEDLY

�WHY? Risk management is supposed to help!




Risk management & project performance

Adequacy of risk management(from Cooke-Davies 2005)

Not at all adequate

Partly adequate

Adequate Fully adequate

1.0

1.2

1.4

1.6

1.8

0.8

Pro

ject

per

form

ance

inde

xC

ombi

ned

sche

dule

/cos

t


Theory

B+

Attainment

CEffor

t A-

Must

do bet

ter

Report card for risk management




WHERE NEXT ?Short-term

“Everything about the future is uncertain …… probably !”


Contributors to RM capability

�Culture

�How do we think?

�Process

�What should we do?

�Experience

�Do we know how to do it?

�Application

�Are we doing it?

Ref: RMMM Report, PMI RiskSIG 2002




Improving Application

Depth and Breadth


Increased depth & breadth

�Depth of analysis�Better tools and techniques

�More user-friendly

�Improved functionality

�Increased integration

�Better analysis�Value Management

�System Dynamics

�Safety and Hazard Analysis

�Scenario Planning




Increased depth & breadth

�Breadth of coverage

�Typically address

threats to project time & cost

�Expand to

other objectives

opportunities

programme/portfolio risk


Hierarchical risk

�Risk = uncertainty that can affect objectives

�Objectives exist at various levels

�Risk affects every level:

�Strategic risk

�Portfolio risk

�Programme risk

�Project risk

�Technical/task risk

�Manage at every level in integrated approach

management

management

management

management

management

management





Addressing Culture

�Risk is not managed by robots but people

�Human psychology is major influence

�Risk attitudes are key

Awareness � understanding � management




Addressing Culture

Attitudes �� Behaviour �� CultureRisk Risk Risk


RISK ATTITUDE

RISK MANAGEMENT EFFECTIVENESS

ignored &unmanaged

lower

CR

ITIC

AL

SU

CC

ES

S FA

CTO

RC

RIT

ICA

L

SU

CC

ES

S FA

CTO

RC

RIT

ICA

L S

OU

RC

E

OF

FAIL

UR

E

CR

ITIC

AL

SO

UR

CE

OF

FAIL

UR

E

higher

understood & managed




“Risk Attitude” = “Risk” + “Attitude”

�Attitude: “Chosen response to given situation ”

�Risk: “Uncertainty that matters ”

�Both are affected by perception

�“What is the situation?”

�“How uncertain is it? How much does it matter?”

�Risk attitude: “Chosen response to uncertainty that matters, influenced by perception ”�Many levels: individual, group, society, nations…

�Exists on a continuous spectrum


RISKSEEKING

RISKAVERSE

RE

SP

ON

SE

TO

UN

CE

RT

AIN

TY

The risk attitude spectrum

–

+

RISKTOLERANT

RE

SP

ON

SE

TO

UN

CE

RT

AIN

TY

–

+

All images from FaceTrace™© Copyright BrainJuicer 2006




Where are you on the risk attitude spectrum?

�“It depends ”

�On …

�external environment (situation)

�internal environment (me/us)

And where should you be?

�“It depends ”

�On objectives

Two key questions





THEN WHAT?Mid-term

“Prediction is very difficult, especially about the future” Neils Bohr





Universal laws

�Risk is related to uncertainty

�Risk matters

�Risk management is a process

�People manage risk


The expanding universe

� Micro level: increased depth & breadth

� Macro level: discovering new dimensions

� Dark matter: exposing unknown unknowns

� Parallel universes: close encounters

� Three possible futures:

1. Continual expansion, infinite universe

2. Expand then collapse (“The Big Crunch”)

3. Repeated cycles of expansion/contraction




The infinite universe

�Option 1 – Continual expansion

�Risk management will encompass more aspects of life: business, personal, social…

�Everything becomes risk management

�“Risk-based …”

“Manage risk, manage life”


The Big Crunch

�Option 2 – Expand then collapse

�Unsustainable growth

�Risk management is latest management fad

�Fail through declining interest and attention

�Over-succeed, normalise into “second nature”

�Self-evident so not needed

“Who needs risk management?”




Repeated cycles

�Option 3 – Expansion/Contraction…

�Current expansion continues then falls back, then…

�Human history indicates periods of more/less focus on managing risk

�Major civilisations: Technology, law, religion…

“Everything in its season”


Which future will happen?

Don’t know

Does it matter?

Can’t know

Focus on next steps …

“Your role is not to foresee the future but to enable it” Antoine de Saint-Exupéry




Next steps

�Project risk management matters

�Must do better

�Several areas for immediate attention

�Need pioneers & rebels


For further information:

Dr David HillsonRisk Doctor & Partners

Tel +44(0)[email protected]

www.risk-doctor.com

project risk management: where next not reactive ... strategic risk portfolio risk programme risk...

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