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

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Image: Wikipedia Commons, public domain