Assessing, mitigating and collaborating on big risks
- Susan Dineen
- Vicki Holschuh
- Steve Johannsen
- Bryon Johnson
- Mike Markiewicz
- Bill Mitchell
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