This video describes how you can, and should, determine your approach to risk management based on the perspectives and views of your primary project stakeholders.
- World renowned boxer Muhammad Ali said, "He who is not courageous enough to take risks "will accomplish nothing in life." Now, his idea of risk, however, may be different than yours and mine. After all, he used to step into the boxing ring with someone trying to knock his head off. Most project managers don't want anything to do with being in a boxing ring, but they're happy to tolerate other risks. So, how do you find out about your stakeholder's risk tolerance? First, be prepared that your stakeholders, sponsors, and the people on your project team will each tolerate risk differently.
Some people might actually step into that boxing ring while others are cautious just walking down stairs. And there's everyone in between. You need to take this into consideration when you talk about risk in your project. The key is to always listen carefully as you discuss elements of your project. The second thing to keep in mind is that people have business motivations to protect scope, time, or money when these constraints are discussed.
We need to understand these motivations. For example, one organization I know of is involved in yearly industry trade shows. At these shows the company is expected to display new products. If they don't have new products ready to show off at the trade shows, it'll impact their business. A project stakeholder in this instance will be totally focused on time constraints because it's critical they have products ready to demonstrate at that trade show.
Risk impacts to cost and scope are a much lower priority for them as long as they get their new product when required. A third factor when considering risk tendency is your stakeholder's performance evaluation. How is your stakeholder being appraised by their manager? What are they being encouraged to do or change in their business area? Candid discussions about your stakeholder's expectations and concerns can give you a feel for which project constraints they'll want to focus on.
To obtain this information, it's necessary to pose critical questions, and listen very carefully to the answers you receive. Without directly asking about their personal performance evaluation you can ask them what business outcomes are they most excited about, and what potential negative business outcomes most concern you? What are you being incented to achieve this year? Fourth, is the culture of the organization. It has a substantial impact on risk tolerance.
Some entrepreneurial organizations will take significant risk, whereas more conservative industries will more aggressively seek to mitigate risk. And as their project manager, they'll expect you to conform to their style. Muhammad Ali used to say, "I float like a butterfly, sting like a bee." Appreciate the risk tolerance of your stakeholders, and you might not float like a butterfly, but you won't be accused of stinging like a bee.
Note: This course follows the latest guidance from Project Management Institute, Inc., as outlined the PMBOK® 6 Guide.
- Explore why dealing with risks needs to be part of the everyday process used to manage a project.
- Learn to outline the most common, pragmatic approaches to identifying risks specific to a project.
- Recall methods for qualifying and quantifying your risks to determine specific risks and manage their costs.
- Examine the primary considerations for a project risk plan and what components should be included in every plan.
- Assess techniques that help you identify the overall risk a project presents to your business.
- Examine several risk analysis and filtering examples that help ensure you've addressed individual risks properly on your project.