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Make the Most of Opportunities in Risk Management

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Focusing on Opportunities

To most people risk has a negative connotation. In risk management, opportunities are the bright side of risk. This article identifies several common opportunities that projects can use to their advantage.

Let’s start by reviewing the terms used to describe positive risk and the actions that can be taken to turn them into reality.

  • A risk often focuses on the negative, for example, a delay caused by a late shipment.
  • An opportunity, according to the Project Management Institute (PMI), focuses on the positive, such as early project completion because a shipment arrives early.
  • To exploit an opportunity is to take action(s) to help realize that opportunity. For example, an exploiting activity for early shipment arrival opportunity might be to set up a bonus payment for the shipper to deliver ahead of schedule. 
  • The outcome is the potential benefit when that opportunity is realized. In our example, that outcome might be savings on labor cost because the project finished early. 

Here are several opportunities that can provide significant value. Take time to consider whether they apply to your project, and, if so, plan for them.

  • Accelerating product development. Exploring ways to deliver sooner can realize business value earlier, which might increase profit. For example, invest in better development tools, train staff members to use AI’s development capabilities, or add highly skilled employees to the team. Agile methods can speed up product development when skilled team members are available and their workload allows them to focus on producing project deliverables. 

Summary: 

Opportunity = Accelerate product development to complete the project sooner

Exploit actions = Invest in better development tools; train staff members to use AI; add skills to the team

Potential benefit: Realize project benefits earlier, increasing profit

  • Consider shortcuts. Opportunities can be pursued by crashing or fast-tracking a schedule to complete projects earlier. Tasks that aren’t necessary could also be bypassed. Note, however, that crashing, fast-tracking, and bypassing tasks can introduce negative risks. For example, bypassing testing before delivering a product usually creates expensive fallout. Shortcuts that support opportunities and introduce minimal risk include bypassing sequential department reviews in favor of prototype testing, where many departments can validate a product simultaneously. No matter which shortcut approach, balance the negative and positive risks to ensure the best outcome for stakeholders.

Summary: 

Opportunity = Use shortcuts to complete the project earlier

Exploit actions = Crashing or fast-tracking the schedule, by-passing unnecessary tasks

Potential benefit: Saving money by finishing the project sooner

  • Reduce manual overhead tasks. AI can automate tasks such as creating draft meeting notes or providing templates for project control documentation. Tools are readily available to automate processes such as expense and decision approvals. These tools save time and can expedite progress through the project lifecycle, as staff time can be directed toward knowledge-based activities rather than chasing administrative tasks. Time saved can be allocated to creative thinking or trying new solutions that can exploit project opportunities.

Summary: 

Opportunity = Reduce overhead tasks/manual labor

Exploit actions = Use AI tools 

Potential benefit: Better project solutions due to a reduction of manual labor and using the time gained on knowledge-based activities

  • Expand available skills. A lack of staff knowledge and availability can introduce project constraints. Partnering with specialist consulting firms can expand the availability of skills and introduce new technology or processes. This specialized expertise can expand product viability or allow a project to deliver more quickly, providing significant opportunities for sponsoring businesses.

Summary: 

Opportunity = Expand skills and capabilities

Exploit actions = Develop strategic partnerships with specialist firms

Potential benefit: Expanded product viability and quicker project delivery

  • Seek to exceed requirements. When given time, team members can derive product ideas that exceed stakeholder’s requirements. Delivering against these product ideas can exploit opportunities. However, that should NEVER be done without a proper change management review before developing products with expanded capability. 

Summary: 

Opportunity = Exceed requirements

Exploit actions = Invest in time to derive new product ideas that surpass stakeholder expectations

Potential benefit: Happier customers, more profit in a commercial environment

 

What other types of opportunities have you found in your projects? Do you track these so you can see whether they might apply to your future projects? Just like lessons learned, potential opportunities make for a great checklist.

 

For more about risk management, check out Bob McGannon’s Project Management Foundations: Risk course.

 

Coming Up

January 9, 2025 Coaching Your Project Sponsor

The project sponsor plays a big part in the success of the project. And yet, very few executives understand their role as project sponsor. In this Office Hours, Antonio Nieto-Rodriguez joins me to talk about what makes a great project sponsor and what you can do to ensure that your sponsor lives up to their title.

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With Difficult Risks, Consider Your Options

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Photo by Burst on Unsplash

Risk management can be difficult when risks are hard to address. Some difficult risks are abandoned too quickly as unmanageable when they could be addressed. Be persistent! Here are four approaches to consider when you are struggling to derive a response to a risk.

  • Try to reduce the probability or impact if the risk occurs. People often think risk management is eliminating risks. Many difficult risks can’t be eliminated. But there are might be actions that can make the risk more manageable. You might be able to reduce the risk’s probability of occurring or its impact if it occurs. OK, this is common practice. But people often don’t do this for difficult risks. Why? Because they assume the impact reduction will be minimal. Instead, do some research to determine what the reductions truly are. For example, time buffers in your schedule can address schedule impacts. Contingency funding can reduce cost impacts. Even a 10 or 20% cost reduction in the risk impact can make a difference at the end of your project.
  • Think about who might be able to help. Maybe you can’t address a risk yourself. But someone else might be able to. Contact them. If you can’t do that yourself, look for a common connection who might put you in touch. People are often happy to help if they can. For example, a colleague of mine asked a local government official to address a risk. The official made an exception which helped the project. Because of their discussion, the council passed updates to local laws, which made many projects easier to deliver. 
  • Explore scope alternatives. Teams often become attached to their approach to completing a project. The scope can become inflexible for no good reason. Often multiple approaches could work to deliver the desired scope. Maybe a different approach to delivering that scope would reduce risk.

Also, some parts of project scope might be less important. Look at removing riskier, less important scope elements. And check whether the adjusted scope delivers enough business value. One word of warning though. People often react negatively to scope reductions because they want the benefits from the scope. Perform a pragmatic analysis of the risks and benefits. But, if achieving those benefits introduces undue risk, they may not be worth it. Do your homework to figure out if the benefits are worth the risk. And if they aren’t, determine whether reduced scope still benefits the business.

  • Conduct progressive status checks, while considering plan alternatives. Let me share a story. There was a project that would benefit by using a software product due for release in four months. The project had a 12-month schedule. Planning on using unreleased software is high risk. To address this risk, the project team took four actions.
    • They developed all aspects of the scope that didn’t depend on the unreleased software.
    • They planned regular status checks on the progress of the new software. In those checks, they focused on any changes to the release date and client reactions to beta test results.
    • They determined the latest date they could wait to buy the new software without impacting their deadline.
    • They planned a way to deliver most of their project scope without the new software–just in case the new software was delayed or didn’t live up to expectations.

These actions reduced risk. The project team could take advantage of the new software if feasible. If not, they had an alternative approach to deliver most of the scope.

Have you had success with other approaches for handling difficult risks? Are you struggling with a risk you can’t figure out how to handle? Share your thoughts and questions in the comments section.

For more about risk management, check out Bob McGannon’s Project Management Foundations: Risk course.

Coming up:

Want to improve your project management and don’t know where to start? I’m a guest on Kim Kaupe’s Coffee with Kim series to talk about what it takes to go from good to great as a superstar project manager. 👉🏼 What can you do to increase the success of your projects? 👉🏼 How do you keep a virtual team on the same page? 👉🏼 What skills should project managers aim to level up in 2023? Here’s the link to sign up: https://www.linkedin.com/video/event/urn:li:ugcPost:7026641716040355840/