Why include opportunity in the risk process?, presentation, David Hillson, London, 05 July 2016 Opportunity (upside risk) management - best practice but does it work? APM Risk Management SIG

1. © 2010-16 The Risk Doctor Partnership, Slide 1
Why include
opportunity in the
risk process?
Dr David Hillson
The Risk Doctor, HonFAPM
LONDON
TUESDAY, 5 JULY 2016

2. © 2010-16 The Risk Doctor Partnership, Slide 2
Key questions
Do opportunities exist?
If so, what are they? (and what aren’t
they?)
Can opportunities be managed?
Simple six-step process
Do opportunities matter?
Problems from not managing
opportunities
Benefits from proactive management of
opportunities

3. © 2010-16 The Risk Doctor Partnership, Slide 3
Uncertainties are everywhere …
Some would be bad, unwelcome,
unhelpful if they happened
Others would be good, welcome,
helpful if they happened

4. © 2010-16 The Risk Doctor Partnership, Slide 4
Which uncertainties
matter?
Uncertainties that help as well as
uncertainties that harm
Both matter
Both need managing proactively
…not only preventing potential problems
“Stop things going wrong”
…but also finding potential benefits
“Help things go right”

5. © 2010-16 The Risk Doctor Partnership, Slide 5
Defining opportunity
Two key dimensions
1. Uncertainty
probability of occurrence
2. Impact
effect on objectives (positive)
Opportunity is
“uncertainty that matters”

6. © 2010-16 The Risk Doctor Partnership, Slide 6
Beware fakes
Opportunity is uncertainty (may or may not happen)
that matters (would affect achievement of objectives)
Opportunity is not
A benefit
“Opportunity to succeed”
A response
“Opportunity to act”
Scope creep
“Opportunity to do something else”

7. © 2010-16 The Risk Doctor Partnership, Slide 7
Can opportunities be managed?
Forward-looking radar  Early-warning
Enables proactive prior positioning

8. © 2010-16 The Risk Doctor Partnership, Slide 8
Managing opportunity:
Simple questions
What are we trying to achieve?
What might help us to achieve it?
Which of those are most important?
What could we do about them?
(Do it!) Did it work?
What’s changed?

9. © 2010-16 The Risk Doctor Partnership, Slide 9
Monitor and
review
Define
objectives
Identify
uncertainties
that matter
Assess &
prioritise
Plan
responses
Implement
responses
From questions to process
WHAT ARE WE
TRYING TO
ACHIEVE?
WHICH ARE
THE MOST
IMPORTANT?
WHAT MIGHT
HELP US TO
ACHIEVE IT?
WHAT COULD
WE DO
ABOUT THEM?
DO IT !!
DID IT WORK?
WHAT’S
CHANGED?

10. © 2010-16 The Risk Doctor Partnership, Slide 10
Why bother? (1)
What if you didn’t?
O B J E C T I V E
PERFORMANCESHORTFALLIF
UNTREATED
RESIDUAL
SHORTFALL
AFTER
TREATMENT
PARTIAL
RECOVERY
FILL
THE
GAP!

11. © 2010-16 The Risk Doctor Partnership, Slide 11
Why bother? (2)
Increased team motivation
Encourages innovation & creativity
Fewer missed opportunities
More benefits captured
Improved success rate
What if you did?

12. © 2010-16 The Risk Doctor Partnership, Slide 12
FINAL THOUGHTS

13. © 2010-16 The Risk Doctor Partnership, Slide 13
Opportunity facts
Opportunity is uncertainty that matters
Opportunity can be managed with a simple process
Managing opportunity brings benefits
WHAT DOES THIS HAVE
TO DO WITH RISK?

14. © 2010-16 The Risk Doctor Partnership, Slide 14
Opportunity and risk (1)
Opportunity is “uncertainty that matters”
SOURCE “UNCERTAINTY …” “… THAT MATTERS”
ISO 31000
(2009)
“Effect of uncertainty
…”
“… on objectives.”
PMI PMBoK®
Guide (2013)
“An uncertain event or
condition …”
“… that if it occurs has a positive or
negative effect on a project’s
objectives.”
APM Body of
Knowledge
(2012)
“An uncertain event or
set of circumstances
…”
“… that, should it or they occur,
would have an effect on achievement
of one or more project objectives.”
Management of
Risk [M_o_R]
(2010)
“An uncertain event or
set of events …”
“… that should it occur will have an
effect on the achievement of
objectives.”
Institution of
Civil Engineers
RAMP (2014)
“A possible occurrence
…”
“… which could affect (positively or
negatively) the achievement of the
objectives for the investment.”

15. © 2010-16 The Risk Doctor Partnership, Slide 15
Opportunity and risk (2)
Opportunity can be managed in a simple process
Monitor and
review
Define
objectives
Identify
uncertainties
that matter
Assess &
prioritise
Plan
responses
Implement
responses

16. © 2010-16 The Risk Doctor Partnership, Slide 16
Opportunity and risk (3)
Managing opportunity brings benefits
Not identifying and capturing opportunities means
GUARANTEED FAILURE
Finding and managing opportunities leads to
INCREASED SUCCESS RATE
WHY WOULDN’T YOU??

17. © 2010-16 The Risk Doctor Partnership, Slide 17
Summary
Opportunities exist and they matter
An opportunity is the same as a threat
(apart from sign of impact)
Opportunities and threats can be
managed together in an integrated
risk process
Do it because it works !

18. © 2010-16 The Risk Doctor Partnership, Slide 18
Watch again on
RiskDoctorVideo…
https://www.youtube.com/watch?v=mEuXOtY8k9s

19. © 2010-16 The Risk Doctor Partnership, Slide 19
For further information
Dr David Hillson
The Risk Doctor Partnership
+44(0)7717.665222
david@risk-doctor.com
www.risk-doctor.com
YouTube.com/RiskDoctorVideo

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at an APM event
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