Risk Can Be a Good Thing

Project leaders take risks. If the risks are too conservative, the project may fail in the marketplace, if too high, a product might not make it to market. Developing and maintaining a balanced project risk portfolio is as important to your projects as it is to your personal investments.

Don’t Drive Risk to Zero

The highest risk in a project is the day you embrace the idea. At that time there is not enough information to accurately access the risk. Energy and optimism can carry the project through this phase, but risk management should start early to identify and control project risks.

Some talk about wanting to drive the risk to zero. That’s the wrong idea. For a product to be great, for it to beat competition, you need to take risks. The bad part of sitting on a market winner is that there will be resistance to taking the risks required to move that company into the future. The competition will take the needed risks since they have less to lose. If the current market-leading company doesn’t take the risks, eventually one of the underdogs will take the risks and win the market. The leader not taking the needed risks builds real risk for the business’s leadership position.

Link: Requirements Risks

Real versus Apparent Risk

Apparent risk is the risk seen and acknowledged by the project team. Apparent risk is what the team can act on. Real risk is the factual risk in the project, regardless of it being seen or acknowledged. The risk management process closes the gap between the real and apparent risks and manages the risks as a portfolio.

A project team that has low apparent risk and isn't aware of their high real risk is usually in that position because they haven't made enough effort to find the risks by spending time with stakeholders, talking to customers and studying competitors.

A project with a well managed risk portfolio has talked about risks with the stakeholders, decided that the risks are appropriate to the company and project (not to little, not too much), put a review process in place, and is committed to risk management as a worthwhile activity.

Link: Talking about risk

When The Riskiest Is The Safest

While it is risky to have a product line that is not successful, the biggest hidden risks often come from a successful product line. There are often risk-averse leaders in middle or upper management, especially in larger companies. Those leaders won’t take the risk of building follow-on to a successful product line and can put the business at risk as competitors always attack a successful product. Not actively pursuing the new winning product is often the riskiest thing a successful company can do. The team that just wants to make incremental improvements to the current success will drain the resources that are needed to fund the next big winner.

Since I live four miles from Foxboro stadium, I have to talk about the last minutes of the Super Bowl. The New England Patriots were backed up against the Rams goal line with under two minutes to go and the score tied. The announcer wanted the Pats to play it safe and wait for overtime, but the Pats pressed on for a spectacular win of the World Championship. What was the bigger risk, pressing the current offensive position or waiting to play in overtime? These are complicated decisions. Leaders and teams assess the risks, make the decisions, and press their advantage.

Link: Project decision making

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