Wednesday, 20 April 2011 11:31

Risk Management and the Impulse to Fail

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Ptimes_April20I think risk management is the most radical aspect of project management.  Why radical? Because it strikes at the heart of the great delusions of certainty and permanence. Risk management forces a reality check that shakes the foundations of unrealistic expectations.  Unrealistic expectations and the attachment to them, even in the face of clear arguments that show they are delusional, are among the prime causes of project failure.

Clearly, nothing is permanent and the only thing we can be sure of is that things will change.  However, when it comes to some events the probability of their occurrence is almost certain.

For example, in an organization that has a consistent record of late and over budget projects caused by unrealistic deadlines and multitasking overburdened resources it is highly likely (though not absolutely certain) that the next project will be late and over budget.

The simplest application of qualitative risk management and informal, intuitive trend analysis will highlight the probability of failure. With the probability highlighted, it becomes clear that something needs to be done to stave off the next failure.

Yet how often do we find highly intelligent people simply ignoring the near certainty of disaster to plunge headlong into a poorly planned endeavor.

Risk Management Avoidance

Once in an article I explored risk management avoidance. My hypothesis was that some people are averse to acknowledging the reality of uncertainty and the reality of the near certainty of adverse effects.  They feel more comfortable by making themselves and others believe that they know what is going to happen.  They are excessively optimistic.

Others are averse to looking at risk for purely selfish reasons. They know that outcomes are not certain and that there are some potential outcomes that are quite negative.  But if they acknowledge risk it might become clear that their pet project may be unjustifiable or ill advised. These people do their best to hide the negative possibilities to manipulate others into supporting their initiatives.  They are the ones who say things like “Don’t worry about X.  Everything is under control.”

In any case, the end result of avoiding the reality of risk is a greater likelihood of failure.

Examples

Take the push for nuclear energy for example. Given the near certainties of natural disasters, of human error, of the impact of greed, and of the wrong people getting their hands on radioactive materials, it is clear that there is a near certainty of events that will have extremely high negative impact.

While the frequency of occurrence may by low, it increases with the number of nuclear installations. Considering this, is it rational to continue to promote nuclear energy as a viable alternative?

The nuclear energy question is on a large scale but the same principles operate on much smaller scale issues.  These include the development of consumer products that have questionable marketability, organizational changes combined with software applications that may disrupt the organizations that they are meant to improve, or deadlines that will not be met even after people work 24-7 and more.

Responsibility

How much are we willing to risk?  How patient can and should we be in the face of risk management avoidance?

How willing are we to put our well being and the well being of our projects and planet in the hands of people who thrive on the promise of short term profits and turn a blind eye to long term impacts?  How confident are we that mere mortals playing the roles of managers, performers and regulators will be perfect and avoid errors and defects?

As project managers it is our responsibility to assess risk and raise the red flag when we see that the risks are high enough to put perceived benefits in jeopardy. When the evidence is ignored we have choices.  We can escalate to see if people at higher levels in the organization are interested in some reality.  We can recognize the lack of rationality in one organization and move to another, if we think things won’t change.  Or, we can stay on and watch the process with compassion, knowing that we have done our best to avoid the pain of plunging ahead into an almost certain disaster.

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