Having been a project manager for all of my working life and now a teacher of project management skills for more than a decade, I always tell my students to follow sound project management principles and to manage risks proactively. Proactive project risk management is integral part of project management. In fact, I think good risk management is half of project management.
That said, in this article, I am going to preach against proactive risk management. I will make a case for something that totally goes against my project management philosophy. I will talk about why proactive risk resolution is not such a good idea in the corporate world.
What is Proactive Project Risk Management?
Proactive project risk management is a five steps process. The steps are:
- Plan for risk management
- Identify risks
- Analyze, identify, and prioritize risks
- Document strategies to resolve prioritized risks
- Constantly monitor and control risks
The fifth step involves implementing risk resolution strategies, those of which were documented in step four. I think, a career oriented project manager should perform all the five steps of proactive risk management diligently, but should stay away from resolving them as part of step five. Career oriented project managers should wait till the very last moment before resolving the risks.
Let me explain it with the help of a project scenario.
Project Risk Management Scenario
Got Ham Inc. was a medium-sized IT services and consultancy company. They were awarded a major project from the government. The project was very prestigious for them. It was the first time they were working with the government. Naturally, the senior management of Got Ham Inc. wanted the project to be handled by the best personnel in the company. They appointed Bat Mahn as the project manager and Rob Hen as the lead sponsor.
Bat Mahn was one of the most experienced project managers at Got Ham. He had proven himself many times in the past, and had an uncanny ability to complete challenging projects successfully. Senior management and customers loved him for his sharp project management skills.
Rob Hen, unlike Bat, did not have any practical experience managing projects. He was a financial whiz measuring everything from the financial angle, and yet, somehow his financial management skills had given him a lot of success in the past.
Bat and Rob had never worked together prior to this project, and Bat soon realized that it was very difficult to work with Rob. They had contrasting working styles.
Bat was an experienced and diligent project manager. He took project risk management very seriously. He was ably supported by his team in identifying, analyzing, strategizing, and resolving the risks. However, Rob had completely different ideas.
Rob thought that risk management was a complete waste of time. He would often proclaim that project management was all about solving real problems and that risks were not real. He would push the team to concentrate on project deliverables without looking at the underlying risks.
Rob would always decline Bat’s requests for extra time or resources to resolve project risks. He would say that the good financial management is key to project success and that risk management is just a theoretical exercise.
How do you think the project ended? Was it successful? Well, that’s a story for another day. However, I have a question for you. Does this story sound familiar? Have you experienced sponsors and/or senior managers interfering with your day to day work and saying risk management has no significance?
I have experienced it many times in my career. On most occasions, project cost takes precedence over everything else in the project.
Reactive Risk Management
The truth of corporate life is that the execution always gets precedence over planning. Risk analysis is important part of planning, but it is not given its due importance in the corporate world. The risks are tackled as they become issues.
In the corporate world, project managers who overcome hard times and solve real problems are rewarded in the performance appraisal. Meticulous planning and proactive risk management is somehow never recognized.
What Should You Do?
Is reactive risk management the right way to manage projects? Hardly! However, this is how many corporate projects are managed. I dare say that you should do the same if you want to grow in your career.
You can follow the five steps of proactive risk management, but stop short of resolving the project risks. Yes, you should analyze the risks and have a plan ready for them, but wait till the very last moment when it becomes absolutely necessary to implement the risk resolution plan. At the same time, I would advise that you communicate heavily to the senior management how you overcame a very difficult situation.
Conclusion
Senior Managers (and even some project managers) don’t understand the difference between risks and issues. They think that risk management is a worthless exercise and that it is overrated.
A good PM realizes that risk management is not only about resolving risks, but about following the complete risk management process. If you love your career, as I used to when I was working as a corporate project manager, you will heed my advice and not resolve project risks till the very last moment.
What is your opinion about the risk management process? What problems do you face while doing it? How much support do you get from your senior managers for doing risk management activities?
I would love to hear your opinion.
Jeremy Cottino
Unfortunately, I might say, you are so right, execution is given more importance than planning and senior management reward PM who overcome the issues more than those who plan (=> noise / no noise). I got this situation no later than in Spring this year, where a project I delivered where successful with no issue and the feedback I received was “yes but that was an easy one”. I was not given the time I spent to plan it and prepare risk responses. But fact…
Ronald Smith
First, I go with the first comment from Lanka. Secondly, nothing is said about boosting positive (or opportunities) risks. Unfortunately, most people look at risks with a negative connotation when in reality there are positive risks. Thirdly, the more time you spend on risk management, the less time/money will be spent on issues and the quality of the product should be better. People will usually pay more for higher quality or even the perception of higher quality. Finally, if you skip (or spend a minimum amount of time) on risk management, you will eventually end up in Crisis Management which will be more expensive then dealing with risks or issues.
The Contrary PM
Risk management has been one of the foundational processes unknowingly tossed out in the goldrush to abandon “Waterfall” to the detriment of many projects. Oopsy. I guess we should have seen that coming….
PMs can’t wait to be told to do our job or expect to be handed explicit permission to do the right thing. Risks don’t care about hot or cold methodologies. Risks won’t cease evolving because a sponsor doesn’t get it.
Project uncertainties need fire insurance – full stop. Some need more than others. Risk management is not all or nothing and the standard doesn’t tell us how to go about doing it because each situation is unique. You must be creative and adaptable to help yourself be successful. There are many ways to get what you need to fire-proof the project and your reputation.
I use these items to figure out how to work with a specific sponsor on risks:
– Is the sponsor more analytical or action oriented? The action person will value a response just in time over response planning. You need an analytical person to help evaluate risks, but it doesn’t have to be the sponsor.
– Is the sponsor more of a conceptual/theoretical or literal thinker? Risks are concepts. Risk planning is theoretical. Issues are literal. Conceptual thinking is really difficult or impossible for some people (they have other strengths), so risk planning is highly undesirable for them, as is strategic planning IMHO. I am very select about what I involve them in so they don’t get frustrated. Discussions must concern very concrete, tactical, and precise details.
-Does the sponsor prefer visuals like infographics or narrative? The visual thinker needs succinct dashboard-like information. The narrative person may need the dashboard and a clear but direct narrative explanation with it. Save the logs and forms for other discussions.
-Does the sponsor prefer short one-topic discussions? If so, you aren’t going to walk through all the risk content with them. You aren’t going to walk through much at all. Keep it to the most significant topic and focus on what they need to decide or do, not the essay behind it. Let them ask for more detail.
I’d love to have big risk review sessions involving deterministic statistical reports, but if I’m the only one who would value it, it would not be beneficial to hold that meeting. I should still do these things to share knowledge and integrate information so I can manage properly, but be very thoughtful as to how the sponsor and team are involved and how I communicate about risk so it’s valuable to them as well. Someone once told me we have to do project management without looking like we’re doing project management.
Oliver Gildersleeve Jr
Educate executives about risk management using metaphors that are within their experience. For example, say that you would be glad to delete the project’s Risk Reserve if they would give up your car’s spare tire and insurance. Show that the Reserve can be calculated objectively from the Risk Register’s list of risks, potential impacts, and likelihoods of occurrence.
For un-educatable executives, hide the Reserve. Eric Uyttewaal’s book, “Forecast Scheduling, 2013”, Chapter 10, lists 18 ways to hide your time delays, e.g. over estimate lags, insert extra holidays and vacation days, add unnecessary tasks and predecessors, etc.
By including and managing shock absorbers, a Risk Reserve and an Estimating Uncertainty Buffer, keep delivering products ahead of deadline. Your reputation will be more impressive than heroics and resources will be eager to be on your team.