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Enterprise Risk Management, The You Need to Knows

Posted on November 30, 2011 by agubiotti

The word risk brings fear to the hearts of Project Managers and to the general population. Risk brings to mind bad things and negative responses, especially when you discuss risk in the broad sense as an “enterprise” rather than as a project or assignment. While a project risk can affect just one component , enterprise risk can and will affect multiple components and projects. So why should you be concerned about an enterprise risk if you are “just managing a project”.

When multiple projects are working to solve an enterprise issue, and if one the projects does not meet its objectives than the others will also fail. All projects in an organization are “in the same boat”, you all must be rowing together if one stops the boat cannot move as expected. Project managers at all levels need to be communicating either via PMO or among themselves. Too often I see project managers not communicating outside of their components/departments. While they are meeting the demands of their area, they have little regard to the big picture and where their project fits in the bottom line of the organization/ company.

You need to know the following on an ongoing basis:

  • Where you fit in
  • If someone is maybe doing a similar project and how you can share knowledge and even resources
  • How your project is being perceived by the rest of the company and managers
  • How you and your resources are being evaluated
  • What are the risks other projects have identified (you may be one of them)
  • How to mitigate the enterprise risk you may be creating
  • If your resources are capable of understanding the risks in your project and how it may affect others
  • The priority of all the projects in the organization and where your project fits in
  • The cost/opportunity that your project serves for the organization and the risk of not meeting that objective.

There are many more that could be listed here but “you need to know that you need to find out what they are”

This “you need to know” theory is both project and enterprise risk management, the more you know the better you can manage the risks involved. Sounds simple but NO it’s very complex because you have to plan to find out what you need to know.

I question whether the whole Solyndra [1]project would have received $500 million if everyone involved on the project would have practiced “you need to know” risk management. This is risk, communications, and management all rolled up into one. Not understanding this concept will only bring you, your project and the enterprise into the negative risk arena rather than focusing in on project delivery.

Positive risk management is managing risk throughout the organization, it takes all levels of the organization to be involved and not pushing down the reponsility of risk management to the lowest levels. Everyone in the organization must be involved if risk is to have a positive outcome.  Everyone must have “you need to know”.

Your comments and suggestions are always welcomed.

Have a wonderful Holiday Season!!

Al Gubiotti

Filed under: Al's Angle, Risk Management | Tagged: , , | Leave a Comment »

Ten Rules to Manage Project Risk

Posted on October 31, 2011 by Joanne Greene-Blose

Everyone knows by now (especially if  you have a PMP/CAPM) that the benefits of risk management in projects are huge. You can gain a lot of money and time if you deal with uncertain project events in a proactive manner. The result will be that you minimize the impact of project threats and seize the opportunities as they occur. Risk Management allows you to deliver your project on time, on budget and with the quality results your project sponsor requires. Your team members will be much happier if they do not enter a “firefighting” mode needed to repair the failures that could have been prevented. Here are 10 Rules that you should take into consideration in your project to manage risk.

Rule 1: Make Risk Management Part of Your Project

The first rule is essential to the success of project risk management. If you don’t truly embed risk management in your project, you cannot reap the full benefits of this approach.

Rule 2: Identify Risks Early in Your Project

The first step in project risk management is to identify the risks that are present in your project. This requires an open mindset that focuses on future scenarios that may occur. Two main sources exist to identify risks: people and documents. People are your team members that each bring along their personal experiences and expertise. Projects tend to generate a significant number of (electronic) documents that contain project risks. You and your team need to analyze these project documents for hidden risks or statements of risk.

Are you able to identify all project risks before they occur? Probably not. However if you combine a number of different identification methods, you are likely to find the large majority.

Rule 3: Communicate About Risks

Failed projects show that project managers in such projects were frequently unaware of the big hammer that was about to hit them. The frightening finding was that frequently someone in the project team did see the issue but never told anyone. If you don’t want this to happen in your project, you better pay attention to risk communication. Team meetings should always start with risk identification and risk status. Another important line of communication is that of the project manager and project sponsor or principal. Focus your communication efforts on the big risks here and make sure you don’t surprise the boss or the customer! Also take care that the sponsor makes decisions on the top risks, because usually some of them exceed the mandate of the project manager.

Rule 4:  Risks can be Threats and Opportunities

Project teams struggle to cross the finish line, being overloaded with work that needs to be done quickly. This creates project dynamics where only negative risks matter (if the team considers any risks at all). Make sure you create some time to deal with the opportunities in your project. Chances are that you see a couple of opportunities with a high pay-off that don’t require a big investment in time or resources.

Rule 5: Who owns the Risk

The next step is to make clear who is responsible for what risk! Someone has to feel the heat if a risk is not taken care of properly. The trick is simple: assign a risk owner for each risk that you have found. The risk owner is the person in your team that has the responsibility to optimize this risk for the project. If a project threat occurs, someone has to be responsible and it should not be just the PM. This sounds logical, but it is an issue you have to address before a risk occurs. Especially if different business units, departments and suppliers are involved in your project, it becomes important who bears the consequences. When you own the risk you are more aware of its consequences.

Rule 6: Prioritize Risks

Whatever priority measure you use, use it consistently and focus on the big risks.

Rule 7: Analyze the Risk

Understanding the nature of a risk is a precondition for a good response. Therefore take some time to have a closer look at individual risks and don’t jump to conclusions without knowing what a risk is about.

Rule 8: Plan and Implement Risk Responses

A risk response is an activity that can actually add value to your project. You prevent a threat from occurring or minimize negative effects. If you deal with threats you basically have three options, risk avoidance, risk minimization and risk acceptance. Avoiding risks means you organize your project in such a way that you don’t encounter a risk anymore. The biggest categories of responses are the ones to minimize risks. You can try to prevent a risk occurring by influencing the causes or decreasing the negative effects that could result.

Rule 9: Log Project Risks

Maintaining a risk log enables you to view progress and make sure that you won’t forget a risk and is the perfect communication tool that informs your team members and stakeholders what is going on. A good risk log contains risks descriptions, clarifies ownership issues even the tasks on the plan that can be affected by the risk The Log should also contain how the risk will be mitigated.

Rule 10: Track Risks and Associated Tasks

Tracking risks differs from tracking tasks. It focuses on the current situation of risks. Which risks are more likely to happen? Has the importance of risks changed? Answering these questions will help you pay attention to the risks that matter most for your project value. Tracking is a real time endeavor in a project and a method of electronic tracking by all members of the team must be implemented as a part of the project reporting.

Good risk identification and tracking can go a long way towards generating a successful project on time and within budget.

-Al

Send me a question or comment @ agubiotti@projectsolversofamerica.com

Filed under: Al's Angle, Risk Management | Tagged: , , | 1 Comment »

January 2010 Could proper risk management have prevented recent terrorism?

Posted on July 7, 2011 by agubiotti

We all deal with Risk in all our projects. We have templates, graphs, spread sheets, etc trying as hard as we can to define the risks that our project will face. When I started this article I looked back at all the projects that I have been involved with and remembered how diligently we tried to define the risks to the project. We sat down with our teams and brainstormed all the ills that could befall the project. We discussed the resources involved, hardware, software and most importantly the people. We dug out the risk template of the day and filled it by assigning the risks a “weight” from “will happen” to “not happening at all”. We added up the scores and then deter-mined how the total compared to other projects of similar size and magnitude. From there we determined if the project should proceed and if the risks were high how to mitigate them so that the project can go forward. Sound like what you do every day on your projects? We also followed up on the risks on a timely basis to make sure the risk was being handled and we updated new and closed risks.

Basic project management, correct?

Well it seems with all the talent and all the articles and processes on risk, that we still can have a person get on a plane with explosives as was the case this past week. If the airlines had gone back to the basics of risk management:

  • Risk Identification
  • Risks Quantification
  • Risk Response
  • Risk Monitoring and Control

Then perhaps the guy with the explosives would never have gotten on the plane. There may have been a control in place to prevent this. If we have the risk process in place and risk communications working among the various members of the team, we can manage risks in a timely, level-headed manner and with minimal impact to those served by the project.

Risk communication is the key in risk mitigation; we need to be constantly communicating via all the “tools” available to us in these challenging times. Even a simple “tweet” can bring to light a risk or solution. Imagine if someone had tweeted at the airport, alert-ing the authorities of a man entering an international flight with no luggage!

Do not wait for the weekly risk meeting. Develop a risk communication method and encourage its use.

Filed under: Al's Angle, Risk Management | Tagged: , , | Leave a Comment »

Day 10 with H1N1 (and better Risk Management)

Posted on October 27, 2009 by Joanne Greene-Blose

I’d said in my post yesterday that getting hit with Swine Flu would fall under the risk management strategy of planning for the “unknown unknowns”. I would like to modify that assertion, and after all, yesterday I did have a fever! Today, my temp has been close to normal (so far) and I’m feeling more like someone with just a really bad cold – a huge upgrade from the previous 9 days. My cough is still horrible (I feel like Doc Holliday from the movie Tombstone) and now there’s fluid in my ears, but it’s amazing how different things seem when the fever’s gone.

Consequently I’m thinking a little more clearly and would like to re-categorize where getting hit with H1N1 should fall.

H1N1 has now been around so long that we all should have had time to come up with the “business continuity” plan and, given all the warnings in the media, not really taken us by complete surprise. OK, I admit, it did take me completely by surprise; but shame on me.

For the rest of you who are out there considerably healthier than I am right now – don’t wait one more day to come up with a contingency plan of some sort should this happen to you or to one or more of your team. I’m going to post a link to an article I found on this topic  just to add a little more food for thought. I found the article by F. John Reh in About.com and it’s entitled Business Planning For a Swine Flu Epidemic.

If you aren’t already nervous about getting this disease how about these stats found quoted in Reh’s article:

“The US government estimates that a more aggressive mutation of the virus could infect 30 percent to 50 percent of the population, lead to as many as 1.8 million hospitalizations and cause between 30,000 to 90,000 deaths.”

Reh’s advice on how to plan for this type of thing makes a lot of sense and ranges from the very simple such as enforcing a “stay home when sick” policy to the more involved such as diversifying your suppliers so that you are not overly reliant in an area that happens to get hit hard.

Interesting reading. Don’t wait.

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Swine Flu strikes even we Project Managers (and biz owners)

Posted on October 26, 2009 by Joanne Greene-Blose

Eight days ago on a Sunday I came down with what, I naively thought, was a cold. My 15-year-old daughter was just recovering from a cold and bronchitis so that’s what I chalked this up to as well.

On Tuesday as I stood outside watching my 12-year-old’s Cross Country meet I was aware that even the slightest breeze actually “hurt”. I thought that was an ominous harbinger of a really BAD cold forthcoming.

On Wednesday I began to lose my voice as congestion set in, and admittedly, did feel feverish. By Thursday I could barely speak and was in to see my doctor by 11 am. I fully expected to be told that I also had bronchitis, would be given a prescription for an antibiotic, and would be on my way. That was when fantasy parted ways with reality. I was told I did not have a cold, nor strep throat (rapid strep test), nor bronchitis, nor seasonal flu (too early for seasonal flu and had not yet been seen in the area), but in fact I had all of the symptoms of H1N1.

You could have knocked me over with a feather (but it would have hurt, as even a breeze hurts!). It was the last thing I expected to hear. I did not know anyone with H1N1 and had not a single best guess where I might have picked it up from. H1N1 however is highly contagious in that the virus can survive for 8 hours on inanimate objects. So if an infected individual went to the grocery store and used a shopping cart, and innocently touched their tongue to a finger to thumb through a stack of coupons then back to the cart – that cart would stay infected all day long unless or until someone wiped it clean. Hence the pandemic.

The really scary thing about this flu is that it fervently attacks the lungs, something that has proven fatal to 5000 worldwide to date. Women are also more susceptible, as are the young (having been confined to my room for days I have time to research). Scarier still is that the vaccine is still no where to be found despite the fact that we knew about this disease at the early part of 2009 whilst it was still confined to Mexico. We’ve had close to a year to prepare for this flu strain yet remain woefully unprepared.

I had my husband call our pediatrician to see if he could get the kids in for a Tamiflu dose – but  they are in a holding pattern, concerned more about treating than preventing at the moment.

On Friday I realized that being able to function normally was another departure from reality and have stayed in my bedroom, pretty much doing no more than existing, since. I’m into my second week with this flu and feel much worse than week one. The cough and congestion has become so bad that my abs are literally sore from the extra workout.  I’m finding that staying hydrated is an elusive task. I’ve never felt so thirsty.

The good news is that after a week straight of a fever I’m starting to feel a bit of a reprieve. Just writing this entry in the blog as early as yesterday would not have been possible.

Will keep you all posted. From a PM’s perspective is there a message here? Perhaps only one of Risk Management. This would be classified as one of those “Unknown Unknowns” that they talk about in the PMBOK. You know, the kind where you don’t know what you don’t know so you can’t plan for it specifically. You therefore do something like a catch-all; you add 10% to your budget or to your schedule after you’ve accounted for everything else that could go wrong.

So here’s one for you all – what do you do in the event that YOU as the Project Manager are suddenly taken ill from the pandemic? Do you have a backup plan? Is anyone trained to step into your shoes? Or would things simply fall apart? Of if you’re a business owner, what then? Have you done any secession planning? Now’s the time to get serious about what you’d plan to do – because it could to happen to you just as easily and randomly as it happened to me. In the meantime, wash your hands and carry an antibiotic soap with you everywhere….

For more info on H1N1, including weekly updates, go to the Center for Disease Control’s web site.

For more info on The Project Solvers of America, Inc. visit www.theprojectsolvers.com .

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