A lot of people, including myself when I started working more in risk management, have a hard time with considering risk as a positive event. This comes from years of having been told to avoid risks at all costs as they are detrimental to our project health. Let us revisit this concept in the hopes of widening your views of risk to see risks as opportunities.
If you are as curious as I am about why we believe or look at things in certain ways, you will want to trace a timeline as to when we started to consider opportunities as an actual factor of risk. Here’s what I found while searching for my answers.
Traditionally the view of risk, this being verifiable via the review of early definitions or risk, was only directed towards the negative and therefore viewed as a threat to projects. This view has remained very much in place until the late 1990s. Although some industries with a more operational look at risk, take the insurance industry, for example, still have not really progressed in this area. Their definition still deals with loss and accidents without any hint of there being a possibility for opportunity.
As more and more professional bodies have started to include risk in their practices or started growing further to include risk within their core processes (such as project management), we can see the start of having not only uncertainties that are negative in nature but also those that can bring us positive events or outcomes. PMI® is one of the professional standards which started with their 2000 release of the PMBOK® Guide to include opportunities into the mix. The definition goes like this: “Project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on a project objective.” PMI® goes on to state that risk management is, therefore, a “systematic process of identifying, analyzing and responding to project risk. It includes maximizing positive events and minimizing adverse events”.
Another key factor to consider beyond the understanding of risk is the fact that in most cases, the Project Manager is not allowed or able to make the required decisions that would move opportunities onto the risk register. There is still a sense of some boundaries that are not to be crossed. Some executives consider the ability to make decisions on opportunities stemming from projects as outside of the PM and the team’s mandate.
It is not until the 6th Edition of the PMBOK® Guide that we see an effort to firm this up with the addition of another risk response strategy aimed at dealing with these specific situations, hence the addition of escalation to both the negative and positive sides of the risk balance. I do believe that this addition to both will allow the PM and the team to be more proactive at discovering more risk events, evaluating them, and providing the necessary information to potential other parties if they cannot be addressed within the context of the project itself.
You would think that this would be enough to sway people but sadly, not. There is still a lot of hesitation when you bring the term opportunity to the table.
How can we change this?
Well, the only sure way that I have seen which can reverse this trend is something that the whole organization needs to work on together. You need to create and position the inclusion of opportunities into the risk process as a value-added component of project management. At the end of the day, every executive wants the process to not only “spend” time and money but to bring in value.
It is incredible to see firsthand what happens when a PM manages to include opportunities and show the value that can be derived from just thinking a bit outside of our regular “boxes.”
Risks can easily be incorporated as opportunities into the same framework in four clear steps. Let us have a look at what these might look like.
- Establish a clear set of parameters as to what constitutes an opportunity for the organization. This is clearly documented in the risk management plan, lexicon, and includes the definition, a set of analysis criteria (adapting the matrix is never a bad idea), and guidance around dealing with out of bounds events where we would need to escalate.
- Provide education to your project management individuals. The PMs and teams, once knowledgeable, will also need to get permission to spend some time addressing opportunities as part of the identification process first and in others, as we would do with any negative risk event. The processes of our framework do not change, we change our perspective on them.
- Start with a few projects and share the findings, document lessons learned and incorporate any findings into the risk documentation to be used going forward.
- Finally, spread the message as part of our scheduled reporting, address, and discuss opportunities within the context of our regular communications. This is where you want to make the opportunities “shine” and discuss the value that they bring to the project and the organization. Early on, this is your best-selling point.
Yes, it all ends up being about demonstrating value. Bring it down to dollars and cents. The day that you do this with your risk management efforts is the day your organization starts paying attention. Executives will start looking at risk management as a revenue-generating process rather than an administrative process.