Mario Andretti (1940-), Italian-American automobile racing driver, one of the most successful Americans in the history of the sport.
When you are working to seem to be working under Control. But on exploring a little more it all comes down to risks and the key is answering a simple question “How much risk are you willing to take on your projects?” that may not have a simple answer.
Who’s willing to take the risk?
One of the things that come to mind with this quote is that balancing risks is quite challenging, and it starts with your organization. Each organization has a risk tolerance you must know in order to manage your projects right. Some organizations are willing to take a great amount of risks in a project in order to get a big reward in case that project succeeds. Others just don’t tolerate any kind of risks and play it safe every step of the way. Now the thing is what goes for your organizations goes as well for you, your boss, your sponsor, your project team, your client, your suppliers and everyone else around your project.
Secondary risk dependencies
The context in which your project is running also has a key role in this. It’s easier to take more risks when money is coming in than on a retracted economy when everyone is counting pennies and cents. This source of impact for risk management is different from the previous (your organization, you, and so on) because you cannot assess its risk tolerance. Instead, it has a strong direct impact on the first ones and changes their own risk tolerance – your organization, you, your boss and so on. But it makes their risk tolerance change over time. Their risk tolerance has to be reevaluated over time in order to check if it has changed or not.
Decide you project risk
Knowing the risk tolerance of the ones that impact your project allows you to do something that can play a key role on your project success: you can decide how much risk you’ll accept in your project. Yes, I know risks are known unknowns thus unpredictable but you still have some margin to make decisions. A couple of examples follow.
Suppose you just got your project plan ready. If you look at the schedule, is there enough buffer when you consider the risk tolerance for this particular project? Did you explicitly considered the project schedule a risk? You’re responsible for this project so you can increase (decrease) the buffer if the project schedule risk is greater (smaller) than tolerable, thus decreasing (increasing) your project schedule risk.
Procurement is another good place to take a look. The simplest way I can think of to change your project risk on procurement is to play with order dates. Again, as the one responsible for the project, you can anticipate (postpone) order dates if the project risk on procurement is greater (smaller) than tolerable, thus decreasing (increasing) your project procurement risk.
What about you?
It would be very useful for all readers (and me) to know if you usually thing about this when planning your projects: do youintentionallychange your project risk level according to your stakeholder’s risk tolerance? Do you take the time to measure your stakeholder’s risk tolerance? How do you measure it? I’d bet there are a lot of different takes on this that could enrich this post if you’d share them.
The one thing to remember
Your decisions can impact how much risk there is on your project. And to make those decisions you have to know the risk tolerance of the people around the project. Finally, you can keep that balance by checking: if everything seems under control, you’re just not going fast enough; but if you go too fast you’re sure to lose it.