SPONSORS

SPONSORS

Risk Doctor Briefing: Three Essential Elements of Risk

SERIES ARTICLE

Crispin “Kik” Piney

The Risk Doctor Partnership

France
________________________________________________________________________

All risk management standards agree that the goal of risk management is to enhance the chances of success of the relevant endeavour. However each of them provides a different definition of risk: ISO31000:2009 calls it “effect of uncertainty on objectives”, the PMI PMBOK® Guide has “an uncertain event or condition that, if it occurs, has a positive or negative effect on the project’s objectives”, and the preferred Risk Doctor definition is “uncertainty that matters”. Each description is true, but only partly so. This matters because until we know what we are dealing with, we cannot manage it in the best way possible:

  • If we use the ISO definition, then our first thought will be to focus on the effect;
  • If we follow PMI, then we will start from the potential occurrence;
  • With the Risk Doctor definition, we start from uncertainty.

Each of these, the effect, the event and the uncertainty, is a component of risk, but, on its own it is not a risk. Even taken in pairs they do not provide the full picture:

  • an effect plus an event is an issue;
  • an event plus an uncertainty is a prediction;
  • an uncertainty plus and effect is a concern.

It is only when you put all three together that you can see what a risk is made of, and use this information to decide on what, if anything, to do about it. Of course, this then requires a longer definition, but the goal enhancing the chances of success is worth the effort.

But what is “success”? It is more than simply “meeting objectives”; it must also include the condition of “complying with project constraints” in order for the final result to remain within scope. Given this clarification, a more complete definition is “Risk consists of three parts: an uncertain situation, the likelihood of occurrence of the situation, and the effect (positive or negative) that the occurrence would have on project success“.

The three-part definition helps with three important stages of the risk management process:

More…

To read entire article (click here)

About the Author

pmwj26-sep2014-Piney-AUTHOR IMAGECrispin (“Kik”) Piney flag-france

France

After many years managing international IT projects within large corporations, Crispin (“Kik”) Piney, B.Sc., PgMP is a freelance project management consultant based in the South of France. His main areas of focus are risk management, integrated Portfolio, Program and Project management, scope management and organizational maturity, as well as time and cost control. He has developed advanced training courses on these topics, which he delivers in English and in French to international audiences from various industries. In the consultancy area, he has developed and delivered a practical project management maturity analysis and action-planning consultancy package. He has carried out work for PMI on the first Edition of the Organizational Project Management Maturity Model (OPM3™) as well as participating actively in fourth edition of the Guide to the Project Management Body of Knowledge and was also vice-chairman of the Translation Verification Committee for the Third Edition. He was a significant contributor to the second edition of both PMI’s Standard for Program Management as well as the Standard for Portfolio Management. In 2008, he was the first person in Europe to receive PMI’s PgMP credential. He is co-author of PMI’s Practice Standard for Risk Management. He collaborates with David Hillson (the “Risk Doctor”) by translating his monthly risk briefings into French. He has presented at a number of PMI conferences and has published formal papers. He can be contacted at [email protected].