Whenever I run a project management course or workshop, I always tell people that “Risk Management” is my favorite topic. Unfortunately, I usually do not have the time to explain this clearly, since risk management is just one in a series of knowledge areas critical to any project. Also, my attachment to risk management is personal, but the courses I teach are professional in nature.
So why do I find Risk Management so attractive or interesting? Because 1) risk is nothing more than “uncertainty,” which is what we need to deal with on a daily basis; and 2) risk can be an opportunity (positive) as well as a threat (negative risk.) Therefore, in any given situation, we can temper the negative with the positive and, strive for a balance. To that end, rather than tallying the amount of risk in our heads, and stressing out about all the uncertainty, especially the negative kind, we need to manage it by outlining our risk management approach, identifying the risks and their characteristics, qualifying the risks, quantifying them, creating response for our risks, and then monitoring them. By following these steps, we can address head on what might be stressing us out, as well as demystify it. If our concern, for example, is that we might be losing our job, or that we might not be able to generate enough business (for us freelancers,) then we can address it as follows:
- describing what that actually means (i.e. jobless in 2 or 3 months,)
- qualifying the risk on a scale of 1 to 10 once we take everything into account, such as spouses income, expenses, debt, etc.,
- quantifying the risk, such as income loss of 30,000 € for example over the first 6 months,
- preparing a response, such as setting money aside for savings, updating your resume, signing up at a temp agency or looking at the potential for doing temporary consulting work, etc.
- beyond that, we would track that risk and determine whether it is real by looking out for triggers, such as seeing business slow down or receiving a less than favorable performance review by your boss. If that happens then we start looking at implementing our response.
However, as I wrote earlier, the risk described above can offer up an opportunity. In that case, “item 3” above would read as follows: a chance to start my own business or change careers or find an even better job, etc.
Therefore, next time you are up late at night worrying about something that might happen, or you are dealing with a client that might be unhappy with you and/or your company, or you have identified a potential opportunity for success, use your time and energy effectively by implementing risk management tools.
Jorge Romero-Lozano, Dipl. Ing., LEED AP, PMP