How Do You Get Agreement on Big Risks?
Assessing, mitigating and collaborating on big risks
Susan Dineen, Vicki Holschuh, Steve Johannsen, Bryon Johnson, Mike Markiewicz, Bill Mitchell, Derrick Van Mell
Topic question: How do you get agreement on big risks?
Question 1: When did you persuade others to take an uncomfortable risk?
Each member of the Workgroup are in the middle of projects with risks: equipment purchases, ERP and other information system installations, taking a new position, changing the organization chart, network in a different arena, and changing catalog release dates, among others. Reflections:
- Delegate the risk: let the manager take the risk—and get the reward
- Clarify who “owns” risk and who shares it.
- Be aware of everyone that’s affected, the “we” in the decision
- Include a broader team, so every understands the stakes and opportunities to collaborate
- Accept being uncomfortable. Risk means change, change is uncomfortable
- Be sensitive to the reputational risk the individuals are taking
- Consider how the risk might permanent change systems and teams
- Be prepared for failure: responding well can be an opportunity
Question 2: How do you assess and mitigate the risk in a decision?
- Consciously ask, “What can go wrong?” Remember that risks have ripple effects
- Assess both the probability and the cost of each risk.
- One risk of a big decision is using up many employee’s energy and focus
- Know the different kinds of organizational risks: not just money and time, but PR and morale
- Use FMEA (Failure Mode and Effects Analysis)
- Create a “risk register” in your project management function or PMO (Project Management Office)
- Get an outsider, perhaps even a competitor, to review the risks in a decision
- Check with your accountant: Your numbers must tie out.
- Consider “AS-IS” forms of mitigation: Accept, Share, Insure, Shed
- Rework contracts
- Share an “after action” report, i.e., how did the decision go?
- Risks can create new opportunities, and opportunities can generate new risks
Question 3: How can you assess the organization’s collective risk preferences?
- Ask them
- Take the board on the journey with you. Big decisions can take a year
- DO NOT surprise the board; keep them current on projects
- Know the organization’s overall risk profile when suggesting a new risk: pick your timing
- Big decisions might take a year to get everyone informed and comfortable
- Create a Table of Authority (spending, decision-making, reporting)
- Get people to think about the future
- Have a strategic plan
Relevant Terms
Image: Wikipedia Commons, public domain
