When it comes to strategic risk management, PMs need to lead by example

There was an interesting article in this month’s (April 2012) issue of PMI’s PM Journal which detailed a study researching the differences in risk management focus between project managers and project owners (the role of the project owner goes beyond the typical project funding or authorization role that is played by project sponsors).

I felt little surprise in their finding that project managers tended to focus on identifying, communicating and managing risks that impacted their project’s constraints – this was termed tactical risk management.  What was a little unexpected was that project owners also appeared to be mostly focused on tactical risks and were not spending more of their risk mind share on uncertainties that mattered to the short or longer term realization of project benefits – this was denoted as strategic risk management by the authors.

This could be related to the (generally) low level of project risk maturity in many organizations or industries, but it could also relate to the following two common factors:

  • Project owners may have developed or have had significant input into the business case for their projects, and while they might have done a good job of capturing the potential benefits of these projects, they may not have invested sufficient effort in considering the factors that could influence (threats or opportunities) the realization of these benefits.  This sense of false optimism gets reinforced in those organizations that do not track achieved benefits beyond a project’s lifetime and incorporate this tracking into annual performance evaluations.
  • The squeaky wheel gets the grease.  In a low risk maturity organization, if the only regular mention of risks originates from project managers, that will tend to anchor the level at which project owners will operate.  This gets further aggravated in those organizations that live milestone-to-milestone – through the project life cycle, if the team and project owner’s focus is purely on achieving the next milestone, risks that may be realized past a project’s completion may be missed or worse, ignored.

While it is true that accountability for risk management related to the realization of project benefits lies with project owners, project managers can influence the shift to more strategic thinking.

Here are some ideas that might get the ball rolling:

  1. Involve project owners on a regular basis in risk identification and analysis activities and force them to go beyond the triple constraint.  Ask the question “Let’s say our project completes on time, on budget and delivers the expected scope at expected quality levels – will we still deliver the change that the organization was expecting?”
  2. Work with project owners to define expected project benefits or performance measures in as quantitative or defensible a manner as possible.  The more objective the measures, the simpler it will be to understand events that could influence them positively or negatively.
  3. Report on the expected outcomes for the project as a routine health indicator alongside the more traditional (e.g. cost or schedule variance) indicators.
  4. Allocate time during regular project meetings for the project owner to provide the team and other stakeholders with an update on what is being done to ensure achievement of expected outcomes.

With some extra effort on the part of project managers, strategic risk management might become another case of “Monkey see, monkey do”!

Categories: Facilitating Organization Change, Project Management, Project Portfolio Management | Tags: , , | Leave a comment

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