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This Focused Performance Weblog started life as a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective, but is in the process of evolving towards primary content on interactive and mobile marketing. Think of it as about Focusing marketing messages for enhanced Performance. If you are on an archive page, current postings are found here.

Monday, September 22, 2003

PMI Congress Notes: Using Risk Management for Strategic Advantage (Dr. David Hillson) -- Why do projects fail despite risk management? Because we aim risk management too low.

Strategy: Vision --> change --> benefits
Tactics: Projects/Programs --> deliverables --> benefits

There is too often a gap between strategy and tactics. Projects fail because they're not linked to strategy and vision. Projects also fail because benefits of project deliverables are not truly, fully usable, operational to achieve strategic benefits.

Gap is "filled" by clarity of project/program objectives. (fp - Strategic Future Reality Tree?) Contention of the presentation is that risk management sits in that "objective" space between strategy and tactics. Businesses/projects are characterized by uncertainty. Multiple sources of risk. (fp - Coming soon to the PMBOK Guide -- yet another BS. RBS...Risk Breakdown Structure).

Uncertainty is not equal to risk. Risk is uncertainty that matters. It matters in context of having an effect on the achievement of objectives. Plato on the future..."More things might happen than will happen." (fp - And more things will happen than things that matter.)

Business benefits, delivered by objectives, affected by risks, addressed by risk management.

Scope of Risk Management - Tradtionally: processes, technical risks; performance, functionality; people, health and safety; Risk is bad for you. Resulting in focus on tactical threats. Typical RM process - risk planning in terms of objectives, risk identification, risk analysis, risk response planning, risk monitoring and control, feedback.

But problems in limiting RM to tactical threats. Disconnects from strategy and benefits; Deliverable focus; One-way street for responses, back to original plan, and only partial in ability to deal with only threats that take us away from our plan.

Broaden RM Scope to include strategic opportunities. Use standard RM processes to address strategic risk, but different objectives; business case, benefits, corporate, stakeholders. Performing Strategic RM with different people: process owners, risk owners... Build 2-way communication between strategy and tactics. Some things to do. Common language and definitions, common process and formats, supportive risk-aware culture, committed competent professional people. (Risk "maturity.")

Risk dimensions: probability and impact. Impact can be positive. We believe that there are "good risks." Opportunities vs threats. Use familiar RM processes to address opportunities as well as threats. Avoiding, transferring, mitigating/reducing, eliminating become exploiting, sharing, enhancing, assuring. Tweaking standard RM tools, techniques to embrace the positive possibilities as well as the threats. Proactively looking ahead to see opportunities while they're coming and there's still something we can do to capture them.

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