How risky is my project?
When you developing a business case for your next project, take a moment to ask yourself that question: “how risky is my project?”
My name is Jonathan Norman. I published nearly 120 books on projects and programs for Gower Publishing and I wanted to ask you that deceptively simple question: “how risky is my project?”
That’s not the same question as “what are the risks facing my project?” nor is it the same question as: “what is the likelihood that I can deliver to schedule and cost?”
There at least three further sets of questions you need to ask yourself before you can respond to this question
Question 1: How do I feel about risk? Are you comfortable or uncomfortable with taking a risk?
Question 2: how competent are we at managing risk and specifically the risk or risks associated with the project in question?
Something may be inherently risky but if you have done it before and you have learned how to recognize and respond to increased levels of risk, then your attitude towards it will be different.
And thirdly, “risky by comparison to what?” What else are you doing? What other projects do you have in your portfolio?
The point I’m making is that risk is about context, perception & attitude. How you and I and various stakeholders will feel about risk will differ according to your attitudes to risk.
Have a look at the risk attitude model which was developed by David Hilson and Ruth Murray-Webster in their series of books on risk attitude and risk appetite.
According to Ruth and David, how we perceive risk, whether we see something as risk or an opportunity, how big a risk or opportunity is considered is tied up with these fundamental questions:
Have I seen this risk before? What is my automatic reaction and how do I feel about it?
These are powerful questions and I recommend that you ask yourself and others these questions on a regular basis.
Ask the major stakeholders and make sure they understand how risky the project is and double-check that you and they understand each other.
You may also be presented with a complex set of weightings and probability as part of a risk profile. This can be tough to relate back to the project so ask yourself these simple questions in relation to the risk at hand and make sure that intuitively your attitude and your sense of risk accords with the mathematical calculation.
If it doesn’t, then either the risk calculations are wrong or you need to think about re-calibrating your risk response.
All projects imply a certain degree of change and some projects are inherently all about change. Becoming more familiar and comfortable with risk is part of that change.
So there’s one other question you may like to add to the mix in the future. No longer simply ask: “how risky is my project?” but “how risky should it be?” Thank you for listening.
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