With Difficult Risks, Consider Your Options
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/