Posts Tagged ‘Risk’

I recently succumbed to a years-long urge to purchase a motorcycle. Without getting into the details, I’m having a fantastic time cruising around the countryside with the wind in my face and experiencing the direct connection with the road. On Saturday, we enjoyed a beautiful mountain road through the trees, leaning our bikes into the "twisties" trying to wipe the ear-to-ear grin off my face (bikers are supposed to be cool). It was the perfect day for a ride.

The guys I ride with are pretty cautious on their bikes, as am I. I wear a helmet and other gear designed to help me ride safely, and make it a point to obey the traffic laws and ride responsibly. I realize that riding a nearly 800 pound motorcycle is inherently risky, so I am careful to mitigate as much risk as is possible. Unfortunately, there are many riders who aren’t and often suffer the consequences.

Going over the top of the pass on Saturday, we noticed several cars stopped on the side of the road along with a riderless bullet bike. My guess is that the rider was going too fast or not paying attention and left the road on one of the turns. Without going into the details of this particular accident, ignoring the potentially catastrophic risk pretty much spoiled an otherwise beautiful day for this unfortunate rider.

Although you are seldom putting life and limb at risk leading a project team, projects are inherently risky things too. Risk aversion is a good thing generally, but I often wonder if it’s a pipe dream to assume that you can eliminate all risk from a project. I have a friend who likes to say, "There are two kinds of riders, those who have put the bike down and those who will."

I wear a helmet, boots, a riding jacket with armor incorporated into the important places along with an alert and defensive attitude while on the bike. I don’t intend to stop riding because of the risk, but prefer to do the best I can to prepare for it and mitigate it.

What are some of the things project leaders can do to avoid spoiling that otherwise beautiful day? Here are a couple of suggestions:

1. Identify the risks associated with the project before it’s begun: All too often when projects are proposed, stakeholders are looking through rose-colored glasses. Although I think it’s important (maybe even vital in today’s economy) to look for projects that will provide potential value to the organization, ignoring the associated risks is very dangerous. If a project is presented for consideration and no risks are identified, that project sponsor should be introduced to a rather large river in Egypt.
2. Craft and follow a comprehensive mitigation plan: Although much of this work should be done before a project is approved, in the real world that doesn’t always happen. What’s more, it may be up to you to look at the identified risks and spend some brainpower on creating a reasonable mitigation plan. Considering a few "what if" scenarios is always a good idea. Engage the project sponsor in this process so that he or she feels a little skin in the game. Realize that you may need to do some education, as most project sponsors don’t really understand their role and will need a little guidance.
3. Don’t let risk paralyze you: Sometimes it’s easy to be so worried about risk that you never do anything creative. Avoid falling into the trap of doing what’s "safe" to keep out of trouble. "Safe" can usually be equated with low value, which doesn’t do any good for you or your project.

Let’s face it, project management is risky. There is always something that could go wrong. Facing the risk up front is always the best strategy—put on your helmet, gloves and riding jacket, then get on the road and enjoy the ride.

How do you plan for and mitigate project risk?
Strategic Project Management

Good Project Management: Risk Acceptance and Building Trust

Risk Acceptance

Personal risk acceptance is directly related to consultative leadership skills and trust-building skills. The greater one’s consultative leadership skills and one’s ability to develop trusted relationships, the less personal and project risk a project manager must bear.

If he project manager’s skills are less than adequate, the risk level that manager must take on may become too great to tolerate; this may leave the project manager in the realm of mediocrity, or failure. Thus, it is important for project managers to build these skills and to manage the amount of personal risk they are willing to accept.

Risk is a necessary component of attaining a high degree of competency. A competent project manager is confident enough in his or her ability to face the possibility of failure. A competent project manager demonstrates on a daily basis a willingness to stick it out.

Developing Trustworthy Relationships

According to Maister, Green & Galford in The Trusted Advisor, to develop trustworthy relationships an advisor must be able to demonstrate their “credibility, reliability, intimacy and a low concern for self.” This applies to project managers too.

If you are trusted by stakeholders (sponsors and team members), they will likely seek your advice and be more inclined to follow your recommendations. You will be targeted for strategic projects that have greater visibility and opportunities for reward. Stakeholders will respect you, forgive you more readily when you make a mistake, warn you of potential pitfalls, and–most importantly–get you involved in the process earlier so you can make your imprint on the project earlier.

Credibility
The first step to developing beneficial trusted relationships with your project team and customers is to be credible. Credibility is based on what you know, such as project management expertise–experiences, reputation and technical competence, and knowledge of business and technical issues.
To establish credibility early in a project, the manager must be able to articulate the scope, impact and desired outcomes of the project. This project manager can define, track, update and report the costs of the project with accuracy and understand, articulate and manage associated business risks.

Reliability
How reliable a project manager are you? This is in your control because it is directly related to your actions. Customers and team members prefer to have a project manager who is reliable.  A project manager can undo their credibility quite quickly if he or she is not reliable and consistent.
Erratic behavior and project management do not mix.

Some practical ways to increase your stakeholders opinion of your reliability are to produce status reports in a consistent and timely manner, to provide them with timely responses to e-mail, voicemail and other contacts, to be consistent in managing personnel, making decisions and dealing with adversity, and to adhere to project processes and rarely make exceptions to them.

Behaviour and Attitude
A project manager’s individual behaviors, attitudes, integrity and openness have a huge impact on whether stakeholders trust him or her.

Project stakeholders, particularly customers and team members who have something to gain or lose, will have anxiety over the project. These stakeholders want a project manager who not only sincerely cares about the project, but also sincerely cares about them and their interests individually. Do you have to have close personal ties with everyone? Of course not! There is not enough time in the day. Do you need to figure out who is important, who has a high level of interest, concern and influence over you project? Yes. Developing behaviors that attempt to build closer relationships with these individuals and support them is what intimacy is all about.  

Low Self-Orientation
If a project manager is consumed with his or her own personal self-interest, stakeholders will discount any of the trust-building behaviors mentioned thus far. A project manager Sydney realizes their agenda is linked to others. He or she, having low self-orientation, will see all stakeholders on equal footing, no matter what level they are on in the organization or what their agenda is. The project manager with low self-orientation will look for opportunities to praise team members in public, will act to put other stakeholder’s interest ahead of his or her own self interest, will express interdependent reliance on others for success, and will show a sincere appreciation for teamwork, commitment and honesty. A project manager with low self-orientation listens first.

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Project Management – Stakeholder Risk Management

In this article we’ll address the people swirling around your project: stakeholders. You’ll find some tips and other resources for optimizing stakeholder involvement in your project.

“Who cares?”

“What do they care about?”

“What am I going to do about it?”

Those are the three simple questions a project team can ask to understand their stakeholders and develop a strategy for keeping them happy.

As we developed a workshop on stakeholder management built on those three questions one of our project management experts, put all the pieces together when he said, “That’s just risk management for people.”

We think he’s right. Review this classic risk management process. Can you see the parallel?

1. Identify risks.

2. Analyze and quantify the risk.

3. Develop a risk response.

So on your next (or current) project consider treating your stakeholders as opportunities or threats.

Step One: Identify risks (stakeholders)

Just as with risk management, we can only manage stakeholders that we are aware of, so be creative and energetic in identifying stakeholders. Cast your net wide and consider all those stakeholders that won’t make a peep unless you step on their toes. Regulators, end-users, your customer’s customers, and internal support staff such as accounting or procurement. Too many project managers don’t include these secondary stakeholders in their normal communication

plans yet get indignant when they obstruct the project. In risk management we identify threats and opportunities. Stakeholders can be project adversaries just as easily as advocates.

While you are trying to uncover the hidden stakeholders, don’t forget about the obvious ones: your team, your sponsor, and the people who will be approving the funding.

TIP: Make sure your stakeholders have a name and email id. Stakeholders are people, not organizations. “Facilities” isn’t going to sign off on your change request, but Cindy, who runs the department, might.

Step Two: Analyze and quantify the risk (what do they care about?)

Risk management calls for prioritizing the risks according to probability and impact. We can prioritize stakeholders similarly – by authority and interest. Interest means “how much do they care?” and authority equates to their ability to affect the project.

Now analyze the high priority stakeholders. You won’t be able to quantify your stakeholders as much as your project risks, but you can organize some key information: What do they care about? How will the project affect them? How does this project fit into their priorities? What do you need from them for the project to run smoothly?

Step Three: Develop a risk response (What are you going to do about it?)

What we do to leverage our supporters and minimize the effect of our opponents will depend upon the answers to the questions above. The more we know about our stakeholders, the better we can plan to work with them. One thing is certain: ignoring them will sap their support and inflame their opposition, so plan for communication.

Rapid changes in information technology continue to bring us new ways to flood our stakeholders with data, but that doesn’t necessarily make us effective communicators. Who needs information? What information? How often? In what format? These questions form the basis of your communication plan. As you develop your communication plan remember these two tips:

1. Positive personal relationships are the foundation of effective communication. Personal relationships magnify the value of the technology we use to deliver information.

2. Use two or more mediums of communication for every stakeholder. For example, meetings should be accompanied by documentation.

The Secret to Success

What’s the secret to risk management? Do it. Proactive, systematic risk management means finding the problems before they find you. Risk management doesn’t have to be complex, but it does have to be disciplined. The same holds true for our stakeholders. Understanding who they are and what they want often isn’t that difficult. The key is to be proactive, to reach out, and influence them before they influence you.

About LSA Global

Since 1995, LSA has helped organizations create and maintain distinct competitive advantages through human capital.

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