David Hillson stated at the beginning of his presentation at Gower Experts Forum, National Centre for Project Management that “the risk persons are business prevention people”.
He pointed out that 2009 CHAOS results were not much different than those of the beginning: 24% of projects fell in the ‘Failed’ category, 44% were deemed ‘Challenged’ and only 32% were successful. Hillson stated that Project Risk Management is supposed to be of assistance. “Risk Management helps us to stay focused and achieve our goals.”
Hillson believes that project success can be a key driver for risk management. Hillson is a self-described Risk Doctor. He makes a lot sense. Risk management:
makes us proactive, not reactive
It provides the space needed to manage effectively.
It promotes focus and consensus.
Hillson identified three areas where there are opportunities to improve risk management: Principles, People, and Processes.
Hillson defines risk as “uncertainty that matters”, i.e. Hillson defines risk as “uncertainty which matters,” i.e., uncertainty that could pose a threat to our project objectives. He stated, “We don’t have all of the uncertainty in the universe on any of our risks registers.” We filter out the essential by determining if it will affect our objectives. Different levels of risk are important. Strategic objectives may not be as important as project objectives. Not all risks are bad. Hillson explained that there are two types of risks: opportunity and threat. However, they are both risks.
Hillson also spoke of the principle that project risks are different from risk events. Sponsors often wonder, “How risky is this project?” The answer is not “Here is my risk register.” Instead, a different judgement is applied to the concept of risk as distinct from risk. All risks are not equal.
Two things are missing from our standard risk processes.
How can we implement risk management? Hillson noted that standard risk processes only end with determining the appropriate mitigating actions. There is no place where you can actually do risk response. He explained that people mistakenly assume that risk response will be integrated into project tasks. However, it can be better managed.
When do we learn?The risk management process is a circle – identify-assess-plan-review – so where does it stop? There is no final step after project execution that will incorporate the lessons learned in the post-implementation evaluation.
Projects are what people do. How we respond to risks is determined by our risk attitudes. Hillson stated that understanding and managing people’s risk attitudes will increase risk effectiveness. Hillson discussed a variety of risk attitudes and how they relate to the event. While you might be cautious when abseiling for the first time, you might be more cautious if you gamble using matchsticks. It all depends on your goals.
Hillson stated that “We focus only upon the tools and forget about the people.”
It was a very interesting presentation. David Hillson’s book, Managing Risk in Projects, can be purchased at Amazon.co.uk or Amazon.com.