The Serenity Factor In Risk Management
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A briefing that describes an underappreciated risk management option: contingent actions.
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The Serenity Factor In Risk Management
- 1. THE SERENITY FACTOR IN RISK MANAGEMENT 10/17/2011 T. Erickson ©2011 All Rights Reserved 1
- 2. Disclaimer Any opinions expressed in the following presentation are the author’s and do not reflect those of the Project Management Institute or its Chapters. 10/17/2011 T. Erickson ©2011 All Rights Reserved 2
- 3. OVERVIEW The Serenity Prayer The Principles The Underappreciated Alternative A Black Swan Hunt 10/17/2011 T. Erickson ©2011 All Rights Reserved 3
- 4. THE SERENITY PRAYER “May I Have The Courage To Change What I Can, The Serenity to Accept What I Can’t, And The Wisdom To Know The Difference.” 10/17/2011 T. Erickson ©2011 All Rights Reserved 4
- 5. THE BASICS Risk: 1: possibility of loss or injury : peril 2: someone or something that creates or suggests a hazard 3 a: the chance of loss or the perils to the subject matter of an insurance contract ; also : the degree of probability of such loss b: a person or thing that is a specified hazard to an insurer c: an insurance hazard from a specified cause or source <war risk> 4: the chance that an investment (as a stock or commodity) will lose value — risk·less 'ris-kl?s adjective — at risk : in a state or condition marked by a high level of risk or susceptibility <patients at risk of infection> Webster’s Online Dictionary 10/17/2011 T. Erickson ©2011 All Rights Reserved 5
- 6. “If anything can go wrong, it will.” Murphy’s Laws, Number 1 “. . . And even if it can’t, it might.” Barton’s Amendment 10/17/2011 T. Erickson ©2011 All Rights Reserved 6
- 7. PRINCIPLES Goals Responses Management Plans Uncertainties 10/17/2011 T. Erickson ©2011 All Rights Reserved 7
- 8. Goals Respo Managem Plans nses ent GOALS Uncert ainties “As you travel on through life, Brother, whatever be your goal, Keep your eye upon the doughnut, Not upon the hole” Mayflower Doughnut Shop, 1956 ““If you don't know where you are going, you might wind up someplace else.” Yogi Berra 10/17/2011 T. Erickson ©2011 All Rights Reserved 8
- 9. Goals Respo Managem Plans nses ent PLANS Uncert ainties “Living consists of figuring out what to do next.” Unknown "The plan is nothing; planning is everything.“ Gen. Dwight D Eisenhower 10/17/2011 T. Erickson ©2011 All Rights Reserved 9
- 10. Goals Respo Managem Plans nses ent UNCERTAINTIES Uncert ainties “Life is what happen to you while you are making other plans.” John Lennon 10/17/2011 T. Erickson ©2011 All Rights Reserved 10
- 11. Goals Respo Managem Plans nses ent RESPONSES Uncert ainties “It doesn’t matter what you’ve got so much as what you do with it.” Tom Erickson 10/17/2011 T. Erickson ©2011 All Rights Reserved 11
- 12. Goals Respo Managem Plans nses ent MANAGEMENT Uncert ainties “It isn’t that things will necessarily go wrong, but rather that they will take so much more time and effort than you think, if they are not to.” Wolf’s Law 10/17/2011 T. Erickson ©2011 All Rights Reserved 12
- 13. RISK RESPONSE “One should expect that the expected can be prevented, but the unexpected should have been expected.” Augustine’s Law of Amplification of Agony, (Number XLV) 10/17/2011 T. Erickson ©2011 All Rights Reserved 13
- 14. RESPONSE ALTERNATIVES Proactive Reactive Also Known Mitigations/ Contingencies/ As? Promotions Exploitations When? Before The Event At or After The Event Cost? Expensive Cheap Necessity? Uncertain Definite 10/17/2011 T. Erickson ©2011 All Rights Reserved 14
- 15. THE UNDERAPPRECIATED ALTERNATIVE Contingencies/ Exploitations Relatively Inexpensive Doesn’t Waste Resources Promotes Flexibility Improves Preparedness 10/17/2011 T. Erickson ©2011 All Rights Reserved 15
- 16. ASK YOURSELVES: How Much Can We Affect The Uncertainty? Threats: Reduce Impact, Likelihood, Velocity Opportunities: Increase Impact, Likelihood, Velocity If Our Efforts Can Have an Affect: Mitigate! If Our Efforts Can’t Have an Affect: Plan Contingencies The Serenity Factor 10/17/2011 T. Erickson ©2011 All Rights Reserved 16
- 17. BLACK SWAN HUNT Black Swans: Highly Improbable, Highly Impactful, Unpredictable Excellent for Practicing Contingent Responses Your Turn: What is a Goal Of Your Organization? What Is The Plan What Is The Worst That Could Happen? How Much Can You Have an Affect? What Could You Do To Prepare? How Would You Know It Was Starting? 10/17/2011 T. Erickson ©2011 All Rights Reserved 17
- 18. GOALS Paperless Environment for Patrols Preventing Child Deaths 10/17/2011 T. Erickson ©2011 All Rights Reserved 18
- 19. PLANS/STRATEGIES Paperless Environment for Patrols Identifymajority of forms Establish data warehouse Develop the infrastructure Preventing Child Deaths Developing methods for assessing risks to children Identifying reporting structures, i.e. hot lines 10/17/2011 T. Erickson ©2011 All Rights Reserved 19
- 20. BLACK SWANS Identify majority of forms No one can agree on the correct form Opportunity to clean house Establish data warehouse Develop the infrastructure Facility can’t support the buildout Developing methods for assessing risks to children Don’t get the budget Identifying reporting structures, i.e. hot lines 10/17/2011 T. Erickson ©2011 All Rights Reserved 20
- 21. CONTINGENCIES No one can agree on the correct form The Chief Picks The Right One Start with a few and call it a pilot Plan to identify the key data that is common Prepare to merge the forms Forms focus groups, test marketing Opportunity to clean house Facility can’t support the buildout Don’t get the budget 10/17/2011 T. Erickson ©2011 All Rights Reserved 21
- 22. WRAP-UP Goals Responses Management Plans Uncertainties 10/17/2011 T. Erickson ©2011 All Rights Reserved 22
- 23. FINAL THOUGHTS “May I Have The Courage To Mitigations Change What I Can. . . “The Serenity To Accept Contingencies What I Can’t. . . “And The Wisdom Serenity Factor To Know The Difference.” 10/17/2011 T. Erickson ©2011 All Rights Reserved 23
- 24. Murphy Lives! Be Ready For Him! 10/17/2011 T. Erickson ©2011 All Rights Reserved 24
- 25. Questions? 10/17/2011 T. Erickson ©2011 All Rights Reserved 25
- 26. Contact Information: Tom Erickson, P.E., PgMP An Enterprise Agilist Email: terickson@apnbok.com Mobile: 703.201.0021 10/17/2011 T. Erickson ©2011 All Rights Reserved 26
Editor's Notes
- This presentation discusses an underappreciated alternative in risk management and introduces the idea that the Serenity Prayer can be a model for risk management.
- What is Risk? Here is a dictionary definition.In short, risk is a measure of uncertainty. Too often the second definition is the one we use, however in risk management, the other three definitions are less confusing. As we will see, there are better terms for describing uncertain. A planned event or desired goal or objective may be AT risk from an uncertain condition or unplanned event, but it is not A risk.
- You can count the fundamentals of risk management on one hand. There are five elements common to all risk management activities, from the boardroom to the back room, from the enterprise to the individual.. . . .
- Goals and objectives are desired events or conditions. They may also be called expectations, expected results, desired outcomes or other labels, but they all represent the end point of a journey. Goals or objectives should be well defined, specific and measurable. It is important to know when you are done so you can devote resources to new or other goals and objectives.
- "how am I gonna do that?!"Plans should include both events and conditions.
- Uncertainty is the generic term for the unknown. Uncertainties can have negative impacts; these we call threats. Uncertainties can also have positive impacts; these we call opportunities.
- So you think something might happen to derail your plan, put your objective at risk. What are you going to do about it? Carefully selected actions, both proactive and reactive, can reduce the likelihood or impact of a threat, or increase the likelihood or impact of an opportunity.
- * Risk management is for managers* Risk management is not optional; it is not avoidable* Risk management cannot be segregated from other management tasks* Risk management is a planning and execution activity* Risk management is not an engineering specialty
- To give us some practice exercising contingent thinking we will conduct a brief Black Swan hunt. Let’s walk through the basic principles and discuss goals, strategies, Black Swan uncertainties, whether or not you can have an impact, and how you might plan contingencies.
- I will fill the charts in while we talk.
- I will fill the charts in while we talk.
- I will fill the charts in while we talk.
- I will fill the charts in while we talk.
- There are five elements common to all risk management activities, from the boardroom to the back room, from the enterprise to the individual.. . . .