book

Capturing Upside Risk

by David Hillson

June 2019

Intermediate to advanced

300 pages

7h 37m

English

Auerbach Publications

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First principlesUncertainty is everywhereNot all uncertainty mattersNot all uncertainties that matter are badRisk is “uncertainty that matters”The definition debateThe great divideReasons for reluctanceIgnoranceLanguageCulturePsychologyInertiaWinning the warEducation and demonstrationPersistenceMemeticsEmotional intelligenceSupportFrom theory to practice
Why projects are riskyCommon characteristicsDeliberate designExternal environmentSynonym confusionLinks between opportunities and threatsRisks and riskAll projects include opportunities
Elements of a risk management processNine structuring questionsTailoring the risk processUse a common process for threats and opportunitiesNine structuring questions for opportunitiesBenefits of integrationIntroduction to Section B
Purpose and principles of risk management planningDefine objectives at risk and scope of risk processReflect risk appetite of key stakeholders in measurable risk thresholdsTailor risk process to match the risk challenge of the projectSummaryThe typical risk management planPurposeContensUnderstanding risk appetite and risk thresholdsDefining risk assessment criteriaDefining risk assessment frameworkSummary and reflection questionsReflection questionsThe next step (“Now we’ve defined the process, where are the opportunities?”)
Purpose and principles of risk identificationAll risks are uncertainEach risk must be linked to at least one objectiveConsider different time perspectivesUse more than one risk identification techniqueInclude multiple perspectivesConsider all potential sources of riskRepeat risk identification throughout the projectSummarySeparating risk from non-risk using risk metalanguageTypical techniques for identifying threatsPast-focused techniquesPresent-focused techniquesFuture-focused techniquesModifying threat techniques to find opportunitiesModifying past-focused techniquesModifying present-focused techniquesModifying future-focused techniquesUsing “two-dimensional techniques”SWOT AnalysisForce-Field AnalysisUsing risk metalanguage to identify opportunitiesSeparate or together??A Mindset for opportunityWrite it downSummary and reflection questionsReflection questionsThe next step (“Now we’ve identified the opportunities, which ones are most important?”)
Purpose and principles of qualitative risk assessmentUse consistent and objective assessment frameworkReflect corporate risk appetite and risk thresholdsSeek input from different perspectivesBeware biasSummaryDefining prioritisation dimensionsTypical techniques for prioritising threatsTwo dimensions: P-I MatrixMore detailed prioritisation in the P-I MatrixThree dimensions: Other approachesTypical techniques for categorising threatsUsing hierarchical project breakdown structuresTiming issuesModifying threat techniques to prioritise opportunitiesAdapting the P-I Matrix for opportunitiesWrite it downSummary and reflection questionsReflection questionsThe next step (“Now we’ve found the important opportunities, what can we do about them?”)
Purpose and principles of quantitative risk analysisQRA is not always neededWhere QRA is required, know why and how to use itNo models are “correct”Include all types of uncertaintyUse best available dataUse the resultsSummaryTypical techniques for modelling threatsMonte Carlo simulationGenerating input dataUnderstanding outputsUsing QRA results to evaluate overall project riskModifying threat techniques to model opportunitiesWrite it downSummary and reflection questionsReflection questionsThe next step (“Now we’ve quantified overall risk exposure, what can we do about it?”)
Purpose and principles of risk response planningStrategy before tacticsDeal equally with both threats and opportunitiesRespond to overall risk, not just individual project risksThe first idea is not always bestResponses must match the level of riskBe creative but realisticEnsure clear ownershipSummaryTypical techniques for responding to threatsModifying threat techniques to respond to opportunitiesEscalateExploitShareEnhanceAcceptSelecting preferred strategyCost-effectivenessRisk-effectivenessTimelinessSecondary risksEnsuring ownershipTurning strategy into actionsWrite it downSummary and reflection questionsReflection questionsThe next step (“Now we’ve planned responses to our opportunities, let’s make sure we do them.”)
Purpose and principles of risk response implementationDon’t cut cornersMotivate action ownersAssume nothingSummaryJust do it!!Write it downSummary and reflection questionsReflection questionsThe next step (“Now we’ve implemented our opportunity responses, who should we tell and how?”)
Purpose and principles of risk communication and reportingBe honestBe specificBe timelySummaryStakeholder risk information needs analysisRisk communication designNow communicate!!Delivery timelinessCommunicating about opportunities: together or separate??Risk register“Top risks” listRisk distributionsMetrics and trend analysisSummary and reflection questionsReflection questionsThe next step (“Now we’ve told people about current risks, how do we keep it up to date?”)
Purpose and principles of risk reviewsDecide when and where to review riskReview risk regularlyDon’t limit reviews to meetingsInvolve key stakeholdersSummaryTypical risk review techniquesAssess status of existing risksReview risk response effectivenessIdentify new risksReview risk process effectivenessSummary and reflection questionsReflection questionsThe next step (“Now we’ve reached a key point in the project, what have we learned?”)
Purpose and principles of identifying risk-related lessonsIdentify lessons from both bad and good experienceDo it regularly, don’t wait until project completionA lesson is not learned until it’s implementedRecord lessons in actionable formSummaryTypical techniques for identifying risk-related lessonsWrite it downSummary and reflection questionsReflection questionsFinal reflection questions
Critical success factors for managing opportunities in projectsCommon risk languageSimple scaleable risk processAppropriate supporting risk infrastructureStrong and mature risk cultureOrganisational learningCSF summaryRemaining workStandards and guidelinesProcess modificationsSupporting risk software toolsThe Future for opportunity management
General references and further readingSpecific references for chapters

Content preview from Capturing Upside Risk

List of Figures

Figure 1-1	Q1. Organisational Definition of Risk
Figure 1-2	Q2. Organisational Approach to Risk Management
Figure 1-3	Q3. Personal Definition of Risk
Figure 1-4	Q4. Support for Broader Risk Definition
Figure 1-5	An Example of Maslow’s “Hierarchy of Needs”
Figure 4-1	Example Risk Breakdown Structure (RBS). (Source: Adapted from Hillson, D. A. (2009). Managing risk in projects. Farnham, UK: Routledge/Gower, with permission.)
Figure 4-2	Risk Appetite Levels and Degree of Variation
Figure 4-3	Defining Levels of Impact
Figure 4-4	Probability-Impact Matrix for Threats
Figure 4-5	Combined “Mirror” Probability-Impact Matrix for Threats and Opportunities. (Source: Reproduced from Hillson, D. A. (2009), with permission.) ...