Having been a project manager for all of my working life and now a teacher of project management skills for more than a decade, I always tell my students to follow sound project management principles and to manage risks proactively. Proactive project risk management is integral part of project management. In fact, I think good risk management is half of project management.
That said, in this article, I am going to preach against proactive risk management. I will make a case for something that totally goes against my project management philosophy. I will talk about why proactive risk resolution is not such a good idea in the corporate world.
What is Proactive Project Risk Management?
Proactive project risk management is a five steps process. The steps are:
- Plan for risk management
- Identify risks
- Analyze, identify, and prioritize risks
- Document strategies to resolve prioritized risks
- Constantly monitor and control risks
The fifth step involves implementing risk resolution strategies, those of which were documented in step four. I think, a career oriented project manager should perform all the five steps of proactive risk management diligently, but should stay away from resolving them as part of step five. Career oriented project managers should wait till the very last moment before resolving the risks.
Let me explain it with the help of a project scenario.
Project Risk Management Scenario
Got Ham Inc. was a medium-sized IT services and consultancy company. They were awarded a major project from the government. The project was very prestigious for them. It was the first time they were working with the government. Naturally, the senior management of Got Ham Inc. wanted the project to be handled by the best personnel in the company. They appointed Bat Mahn as the project manager and Rob Hen as the lead sponsor.
Bat Mahn was one of the most experienced project managers at Got Ham. He had proven himself many times in the past, and had an uncanny ability to complete challenging projects successfully. Senior management and customers loved him for his sharp project management skills.
Rob Hen, unlike Bat, did not have any practical experience managing projects. He was a financial whiz measuring everything from the financial angle, and yet, somehow his financial management skills had given him a lot of success in the past.
Bat and Rob had never worked together prior to this project, and Bat soon realized that it was very difficult to work with Rob. They had contrasting working styles.
Bat was an experienced and diligent project manager. He took project risk management very seriously. He was ably supported by his team in identifying, analyzing, strategizing, and resolving the risks. However, Rob had completely different ideas.
Rob thought that risk management was a complete waste of time. He would often proclaim that project management was all about solving real problems and that risks were not real. He would push the team to concentrate on project deliverables without looking at the underlying risks.
Rob would always decline Bat’s requests for extra time or resources to resolve project risks. He would say that the good financial management is key to project success and that risk management is just a theoretical exercise.
How do you think the project ended? Was it successful? Well, that’s a story for another day. However, I have a question for you. Does this story sound familiar? Have you experienced sponsors and/or senior managers interfering with your day to day work and saying risk management has no significance?
I have experienced it many times in my career. On most occasions, project cost takes precedence over everything else in the project.
Reactive Risk Management
The truth of corporate life is that the execution always gets precedence over planning. Risk analysis is important part of planning, but it is not given its due importance in the corporate world. The risks are tackled as they become issues.
In the corporate world, project managers who overcome hard times and solve real problems are rewarded in the performance appraisal. Meticulous planning and proactive risk management is somehow never recognized.
What Should You Do?
Is reactive risk management the right way to manage projects? Hardly! However, this is how many corporate projects are managed. I dare say that you should do the same if you want to grow in your career.
You can follow the five steps of proactive risk management, but stop short of resolving the project risks. Yes, you should analyze the risks and have a plan ready for them, but wait till the very last moment when it becomes absolutely necessary to implement the risk resolution plan. At the same time, I would advise that you communicate heavily to the senior management how you overcame a very difficult situation.
Senior Managers (and even some project managers) don’t understand the difference between risks and issues. They think that risk management is a worthless exercise and that it is overrated.
A good PM realizes that risk management is not only about resolving risks, but about following the complete risk management process. If you love your career, as I used to when I was working as a corporate project manager, you will heed my advice and not resolve project risks till the very last moment.
What is your opinion about the risk management process? What problems do you face while doing it? How much support do you get from your senior managers for doing risk management activities?
I would love to hear your opinion.