PMexpo 2017 - 27 ottobre 2017 ----------------------------------------------------------------------- How to manage risks you didnt know you were taking (David Hillson - The Risk Doctor) https://www.pmexpo.it/2017/programma/s002tk

1. Un evento organizzato da:
How to manage risks
you didn’t know you
were taking
Presented by
Dr David Hillson
FIRM, PMI Fellow, HonFAPM
The Risk Doctor The Risk Doctor Partnership
david@risk-doctor.com www.risk-doctor.com

2. © 2003-17 The Risk Doctor Partnership, Slide 2
We all know what “risk” means, right?
WRONG !

3. © 2003-17 The Risk Doctor Partnership, Slide 3
Risk = Uncertainty
True or False ?
Risk = Uncertainty that matters
What is risk?
≠

4. © 2003-17 The Risk Doctor Partnership, Slide 4
Risk = Uncertainty that matters
SOURCE “UNCERTAINTY …” “… THAT MATTERS”
ISO 31000
(2009)
“Effect of uncertainty
…”
“… on objectives.”
PMI PMBoK®
Guide (2017)
“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.”

5. © 2003-17 The Risk Doctor Partnership, Slide 5
Two key questions
1. What kind(s)
of uncertainty?
2. What kinds of
“mattering”?

6. © 2003-17 The Risk Doctor Partnership, Slide 6
Two typical answers
2. …with a
negative effect
on budget or
schedule
1. Uncertain
future events… T
H
R
E
A
T
=

7. © 2003-17 The Risk Doctor Partnership, Slide 7
Is that all?
Risk in projects is much more than THREATS,
i.e. bad uncertain future events that, if they
happen, would have a negative effect on budget
and/or schedule
Any uncertainty that matters is a risk that
needs to be identified, assessed and managed

8. © 2003-17 The Risk Doctor Partnership, Slide 8
Risk = Uncertainty that matters
What are we missing?
Different types of uncertainty
– not just uncertain future events
Different types of effect
– not just threats to time and cost

9. © 2003-17 The Risk Doctor Partnership, Slide 9
1. Which impacts matter?
Uncertainties that help as well as
uncertainties that harm
Both need managing proactively
Managing risk means…
…not only preventing potential problems
“Stop things going wrong”
…but also finding potential benefits
“Help things go right”

10. © 2003-17 The Risk Doctor Partnership, Slide 10
“An uncertain event or condition that, if it occurs, has a
effect on a project’s objectives”
[PMI® PMBoK Guide Chapter 11, 2017]
positive or negative
Not just threats

11. © 2003-17 The Risk Doctor Partnership, Slide 11
Which objectives?
Not just time and cost
Any objective can be affected by risk (+ or –):
Technical performance
Health & safety
Regulatory compliance
Customer satisfaction
Profitability/margin
Reputation
Market share
Strategic fit, etc.

12. © 2003-17 The Risk Doctor Partnership, Slide 12
Risk = Uncertainty that matters
On the “mattering” side:
Positive as well as negative impacts
(opportunities as well as threats)
All objectives are in scope
(not just time and cost)

13. © 2003-17 The Risk Doctor Partnership, Slide 13
Not just uncertain future events:
“An uncertain event or condition that, if it occurs,
has a positive or negative effect on a project’s
objectives”
“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”
“Risk management explicitly addresses all
uncertainty”
2. What kind of uncertainty?

14. © 2003-17 The Risk Doctor Partnership, Slide 14
What kind of uncertainty?
Any uncertainty that matters, including:
1. Stochastic uncertainty
2. Aleatoric uncertainty
3. Epistemic uncertainty
4. Ontological uncertainty
If it matters it must be managed
, also known as emergent risk
, also known as ambiguity risk
, also known as variability risk
, also known as event risk

15. © 2003-17 The Risk Doctor Partnership, Slide 15
1. Event risk (stochastic)
Uncertain future events that may or may not happen
Examples:
A key supplier may go out of business
The client may allow incremental deliveries
We may lose a critical resource just when we need them
A subcontractor may propose enhancements to our
standard processes
Manage through standard risk process
Identify, analyse, plan & implement responses

16. © 2003-17 The Risk Doctor Partnership, Slide 16
2. Variability risk (aleatoric)
Certain future events with variable characteristics
Examples:
The trial may take longer or shorter than planned
Productivity may be above or below target
Raw material costs may rise or fall
Unseasonal weather conditions may occur
Analyse & manage through quantitative risk analysis
Describe using ranges & probability distributions

17. © 2003-17 The Risk Doctor Partnership, Slide 17
3. Ambiguity risk (epistemic)
Certain future events with ambiguous characteristics
Examples:
How will competitors react to our planned new product launch?
Client demands use of new technology outside our experience
New regulations are expected but scope of change is unknown
Our planned system design has high inherent complexity
Identify & manage through exploring & experimenting
Prototyping, benchmarking, seek expert input

18. © 2003-17 The Risk Doctor Partnership, Slide 18
4. Emergent risk (ontological)
Conceptual limitations of world-view
“Unknown-and-unknowable unknowns”
Examples (?!):
Disruptive inventions
Cross-over technologies
Game-changers
Manage through continuity management
Environmental scanning, resilience & flexibility

19. © 2003-17 The Risk Doctor Partnership, Slide 19
Risk = Uncertainty that matters
On the “uncertainty” side:
All types of uncertainty
Stochastic
Aleatoric
Epistemic
Ontological
Event risk
Variability risk
Ambiguity risk
Emergent risk

20. © 2003-17 The Risk Doctor Partnership, Slide 20
Final thoughts

21. © 2003-17 The Risk Doctor Partnership, Slide 21
Why does this matter?
Limited
concept
of risk
Ineffective
management
of risk
 
Accurate Effective
How we think about risk determines how we
manage it

22. © 2003-17 The Risk Doctor Partnership, Slide 22
IF YOU DON’T IDENTIFY A RISK, YOU’RE TAKING IT BLIND

23. © 2003-17 The Risk Doctor Partnership, Slide 23
Risk is
that
THREAT
OPPOR-
TUNITYEVENT RISK
VARIABILITY
RISK
AMBIGUITY
RISK
EMERGENT
RISK
ANY PROJECT
OBJECTIVE
uncertainty matters
any

24. © 2003-17 The Risk Doctor Partnership, Slide 24
Final questions
What risks are you taking
without knowing it?
Do you include all uncertainties
that matter in your thinking &
practice?
If not, why not?
Would it be possible?
What changes are required?

25. © 2003-17 The Risk Doctor Partnership, Slide 25
Grazie per l’attenzione
Eventuali domande?

26. © 2003-17 The Risk Doctor Partnership, Slide 26
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