A Thing or Two about Risks

In the previous post, we saw the case for explicit risk management in agile projects.

Before we move forward with Identifying Risks, let us try to set the context and see what is a Risk.

Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project objective – PMI Definition
Risk is an uncertain event or set of circumstances that, should it occur, will have an effect on the achievement of the project’s objectives ~ APM.

What is the difference between risk and uncertainity?
I found a good example explaining the difference from this book Managing Risks in Organizations – A guide for Managers.

When making decisions under conditions of risk, you know the probability ofthe risk event you are examining. When making decisions under conditions of uncertainty, you do not.

For example, before leaving home, If you look out the window to check the weather and find that it appears as if it is going to rain, then you are making a decision under conditions of uncertainty and decide to bring an umbrella with you.
However,if you check the weather website and learn that the probability of rain is 80 percent and this leads to bring umbrella to work, you are engaging in decision making under conditions of risk.

How do you handle Risks?
Once you have the list of risks, you can choose to either mitigate it or Accept it and move on or Ignore it.

I understand the part of Mitigating a Risk. It makes sense to me. But if you see, we have not identified risks for a long time. How is this different from identifying a Risk and ignoring it or Accepting it as a risk and move on?

Well, it is all about informed decisions. When you identify something as a Risk and due to whatever reason, if you decide not to mitigate it, then all your stakeholders will know this upfront and when it actually happens, it will be considered as a collective decision. As a Project Manager you have reasons of why we have decided to not to handle it. You do not have to panic and there will be no blame game.

Why do you talk about blame game here?
Well, Project management is all about handling emotions well. When something doesnt go right and have a negative impact the emotions will be at peak and everyone is human (Not Buddha). This can lead to blame games and will definitely lead to a lose-lose situation.

Hence to Cover your A, Cover your team’s A, Cover your Key stakeholder’s A, i feel it is very important to make informed decisions and Explicit Risk Management will help you make informed decisions.

In the next post, let us take a look at the key aspect of risk management. Identifying Risks!!

Till then, Happy Learning!!!!

Reference:
Managing Risk in Organizations: A Guide for Managers

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