Risk and Opportunity: How can risk be good?

who is the person who accepts the risks and opportunities inherent in a new business opportunity? This is a topic that many people are looking for. thevoltreport.com is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thevoltreport.com would like to introduce to you Risk and Opportunity: How can risk be good?. Following along are instructions in the video below:
Could you start by just telling me a little bit about your risk management. Experience. Experience.
Well thank. You very much andrew. I am.
The risk doctor. Theres only risk doctor. But i got to be the risk doctor.
Really by chance initially working in a major defense contractor. And was told to do risk management by the mo d. In the i guess.
It will be the early 80s and discovered. I had a little bit of a knack for it and so that got to be quite interesting and helpful. I started helping some of my colleagues to manage risk in their projects.
And then realized. Theres a whole big wide world out. There who needs help so the risk.
Dr. Brand has been going for about 10 years. Weve worked in over 40 countries every continent except the antarctic.
Its a bit too cold for us pretty much every industry sector and all sorts of different kinds of risks so not just project and program. But also strategic corporate environmental reputation health and safety counterterrorism fraud. So we cover the whole risk picture the whole globe and its a very fascinating thing to be doing everyone knows risk is bad david.
But whats all this about good risk or positive risk upside risk is there such a thing as a good risk well. If you ask the man in the street would you like to have a risk happen to you im sure hell say no. But if we go back to the origins of the idea of risk.
I like to describe risk with three simple words risk is uncertainty that matters. There are lots of uncertainties in the world that dont matter all risks are uncertain but not all uncertainties are risks so if we take the idea of uncertainty that matters clearly anything that might happen or might not but if it did would hurt us and slow us down and damage value and cost more money. Thats an uncertainty that matters and we need to manage it.
But there are other uncertainties that matter there are things in the future that could happen they might not happen if they did happen theyd be helpful. So they would help us to save money save time increase our value and benefits enhance our reputation and rather than just relying on good luck. We could actually look for those and manage them proactively.
So the the kind of byline. The tag of uncertainty that matters includes the bad things. But also the good things.
Whats also interesting is that if you go back to the origins of the word ris akari. An old italian word it does actually have in there the concept of both upside and downside. And thats also reflected in the chinese word wei zhi.
Which means uncertain means it means risk and wei zhi has two parts way means crisis or danger and jeet means opportunity and crisis. Plus opportunity in chinese is risk. Its the yin yang.
Double sided concept. So weve always had that double sided idea of bad things and good things could happen and we need to manage both of them the modern understanding of risk includes them both so threats. Plus.
Opportunities are both flavors or types of risk so in managing opportunities should we manage them differently from threats. Well if you take the idea that theyre both the same thing theyre both uncertainties that matter then an opportunity is the same as a threat. The only difference is the sign of the impact positive or negative.
Now if theyre both the same kind of thing. Then we ought to be able to manage them using the same kind of process so wed say lets for risk identification. We can identify threats things that might go wrong.
We could also identify opportunities things that might go well and help us not all those opportunities will be equally good so we need to prioritize them some will be stupid ideas. Some will be golden opportunities. So we need some assessment and prioritization step and we could do that using probability how likely is the opportunity to happen and impact how helpful would it be just the same as threats once weve prioritized them then we need to develop responses.
So we dont just hope we get lucky we try and make the opportunity happen or make it better so like avoiding threats or minimizing threats. We can exploit opportunities and maximize opportunities. Its the same and once weve got some some good actions.
Then we implement those actions and review in just the same way so the risk process identify assess plan and manage we can do that for opportunities. Find the opportunities pick out the good ones decide what to do and do it. And its exactly the same as threats.
So id say manage them together in an integrated cohesive single risk management. Process and then you have one process. Which serves two purposes.
Minimizing threats and maximizing opportunities. Were using the same resources the same process and its obviously much more efficient. Why should we bother to focus on opportunities surely we should just worry about the threats.
Yes. There is a natural tendency to want to manage threats first and i think there are very good psychological reasons for that a maslow for example maslows hierarchy of needs suggests that the lowest level of need is about survival and in project and program terms its threats. Which are threatening the survival of survival of our project and programs.
So we focus on the lowest level of the hierarchy. First before we get to what maslow calls the growth needs which represent opportunities so there is a psychological reason for looking for threats before opportunities. But i think were really missing a trick.
If we only focus on the downside because if you have a plan and you identify the threats that would take you away from the plan and then you try and manage your way back to plan. If you cant manage all the threats. Theyll still be a performance shortfall.
Whereas. If in addition you manage opportunities to exceed the plan to save time and save money and you capture some of those then those captured opportunities can plug the gap for the threats that we couldnt manage to manage so theres a kind of trade off there swings and roundabouts between threats and opportunities. But theres a whole range of other things.
Its extremely motivating for a project team to go actively looking for ways to work faster smarter. Cheaper and its actually good news to the boss. I found a list of things that could go wrong and heres some things were going to do about it.
But ive also found a list of things that could create additional value and save time and money with some actions to go with it my risk register has threats and opportunities. So its a very good good story in terms of making sure we create maximum value isnt not actually doing this or is this just theory. I mean perhaps you could give me an example yes.
There is a criticism that maybe this is just some kind of theoretical. You know desire for being equal and equitable and treat things in some sort of balanced way. But major organizations are doing this for one thing.
Its mentioned in the iso risk standard iso 31000 says very clearly that risk is the effect of uncertainty on objectives footnote effect can be positive or negative. So anybody who wants to comply with the iso standard of course is going to be doing this but major commercial organizations are doing it because it works. Because it helps them to create additional value additional benefits to focus on the upside and to make more of their projects than they would if they didnt so theyre only doing it because it actively adds to the bottom line.
Theres quite a nice example. I was involved with the nasa project. The constellation project.
Which is to take somebody to mars and hopefully bring the back again. And one small part of that project is to build a base station on the moon. So that we start on the moon.
And then we can build the rest of our rockets to go to mars starting from the moon and nasa was stuck in terms of how to actually build this base station. How could we go about thinking about a base station on the moon. And i ran for nasa.
An opportunity workshop to try and unlock their creative thinking to help them to be more innovative in spotting ways in which we could do this technically very challenging and obviously high cost high risk part of the program and through the use of opportunity management. We identified eight specific things that they hadnt thought of before that might not happen. But if they did would really help them achieve this goal and along with those things actions.
We could implement in order to make those good things happen or at least make them more likely and the nasa team felt within maybe one hour. The opportunity focus had really helped them to unlock their thinking. And find a different approach.
The only problem with that is that about nine months ago. Obama canceled the moonbase as part of the the constellation program and were all very cross about that because now my great example is not going to actually be built. But in in practice.
It was a good way of using the opportunity thinking in a very challenging project environment to help them to find better solutions. So. What be your top tips then for managing these opportunities.
Okay well you could of course just hope that youll get lucky. But whats much better much more professional is to try and make your own luck and we can use the risk process not only to manage downside risk and of course. We must do that but also to manage upside risk so that we go actively looking for ways to work faster smarter cheaper to save time save money create value every project manager is going to want to do that so i would say take the approach that you currently use for managing threat based risks the downside risks and just extend it expand it to think about upside risks as well remember that an opportunity is the same as a threat.
The only difference is the sign of the impact so everything we can do for threats. We can do for opportunities and that makes it really easy you know how to do this all you have to do is do what youre currently doing for bad risks and do that for good risks. Its easy.
Why wouldnt you and is there further information available. If you want to read more about this approach. Well.
Whats interesting is there isnt a lot in terms of textbooks on opportunity management. I wrote a book on this called effective opportunity management for projects in 2004. And that still remains.
The only major textbook on the subject. Most standards now include it so. The apm pram guide for example.
The pmi practice standard in project risk management both include the idea of managing upside risk alongside downside. But its theres no real textbook apart from my old 2004 book. Which fortunately is still available .

who is the person who accepts the risks and opportunities inherent in a new business opportunity?-0
who is the person who accepts the risks and opportunities inherent in a new business opportunity?-0

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