Risk management as part of the project management process focusses on identifying, mitigating and controlling risks that might negatively affect the outcome of the project. We inherently assume that risk is bad and if a risk occurs then the effect must be negative.
But if we look at occupations or activities that are inherently risky such as financial trading or climbing a mountain or brain surgery, people involved in those activities understand the risks (or at least we hope they do) but are prepared to take them because the upside far outweighs the risks. The profits, for instance, of a successful financial deal, removing a malignant brain tumour to enable a patient to live a normal life, or the sheer thrill of climbing a challenging peak. In these situations risk is not a negative connotation – it is, in fact, the very thing that makes the activity worth undertaking.
So why, in project management, do we attempt to avoid all risk and view the occurrence of a risk as something to obviate when, in fact, risks could open up opportunities that could make the project more successful. Complexity in projects can never be without some risk so why not broaden our view of risk and discuss what we might gain from it and what we can learn from it instead of trying to control it?
People who are willing to take risks are the entrepreneurs, the creators and inventors; and whilst some projects may necessarily have to play safe there are others that could benefit from some calculated risk-taking. For instance, risk-taking can lead to technological innovation and progress that benefit whole societies; where would we be now without the experimentation that led to the development of modern medicines, or even just the innovations that helped develop our smartphones. Progress in any field can rarely be achieved without taking a risk.
Many IT projects are pushing the boundaries of current technology so are, on the one hand, innovating and yet we expect to manage and control the risks in a way that can stifle innovative thinking.
By embracing (and taking) risks on projects there are two potential outcomes, both of which have benefits:
- You achieve something better than the client and stakeholders were expecting either in terms of what you deliver or the timescale in which you deliver it so this is a win situation.
- You gain truly useful knowledge from the experience that you can take to the next project, knowledge far more useful than the usual points to come out of a staid “lessons learned” process at the end of a safe project. The best lessons are the ones learned the hard way—by trying and failing.
Obviously, not all projects are suitable for taking a risk in the hope of achieving greater things or learning something genuinely useful, for instance avoiding risk is necessary if you are developing safety equipment, weapons or medicines. But some projects are suitable and you could be missing out on these benefits by assuming risk is always negative.
So instead of assuming all risks are bad take a different view: risks themselves are neither good nor bad but rather it is our personal appetite (or our company’s appetite) for risk that determines how we behave when faced with a risk. It is, perhaps, our behaviour when faced with risk that can be either negative or positive. But when evaluating risks don’t just look at the downside of the potential risk occurring also look at the downside of not taking the risk – not taking a risk could perversely be the negative influence in some situations. For example a deliberate decision to not proceed with a project exactly because it is a risky venture could deprive your organisation of being instrumental in important progress – a missed opportunity.