Risk Management: The Inconvenient Truth

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Although I speak on project risk management I see myself as a project management consultant who focuses on risk management because I personally believe that it is vital to successful project delivery. It seems though that I’m in the minority.

I’ve spent a long time asking why more people don’t use risk management, but to be honest it’s still no easier a question to answer now than it ever has been. So I’m just going to call it as I see it.

Project Managers aren’t doing enough to identify and manage risks and project boards let them get away with it.

The cost to our organisations isn’t just measured in terms of money lost on individual projects, but in opportunities lost to the organisation as a whole. Until we face this truth and deal with it, we will continue to suffer the consequences.

Now I’m not saying that project managers are outright lying to their project boards. What I am saying is that all too often project plans, which are incomplete, poorly thought through and not backed up by anything other than the project manager’s view of the world, are accepted without rigorous testing by the board. If any project board took just one plan presented to it and challenged the project manager to explain it, that board would probably find that the plan would not survive more than a few minutes’ inspection.

If this seems a bit confrontational, please don’t shoot the messenger. I’m just saying what I’ve believed for years now and I’m supported by studies that seem to say the same thing. The latest one comes from the Economist Intelligence Unit. In its study, “Preemptive Action: Mitigating Project Portfolio Risks in the Financial Services Industry” they found that “this proactive approach, which requires both a rigorous project management practice and intrepid executives willing to make difficult decisions, is unusual in the industry.”

So what needs to change?

Well, project managers need to start off by incorporating risk management activities into their up-front planning and they also need to continue to review, manage and communicate risks right the way through from the start to the end of their projects. Project boards need to be on the look-out for information on risks and evidence that these risks are being managed, rather than just reported on. That means giving project managers an occasional grilling about key risks rather than just accepting risk reports without even challenging them.

The sooner that both project managers and project boards join forces to overcome risk the sooner that they can move on to embrace opportunities.