Leveraging Best Practices in Risk Management For Strategic Outcomes. Peter Schmidt Director ESI International

Transcription

1 Leveraging Best Practices in Risk Management For Strategic Outcomes Peter Schmidt Director ESI International

2 Agenda The Big Picture Current Realities & Market Trends Getting a Handle on Risk Risk Management Process Best Practices and Lessons Learned Identification Qualification & Quantification Response strategies Singing in concert Documentation and feedback loops Final thoughts building talent, driving results 2

3 Uncertainty Unknown Unknowns Known Unknowns Known Knowns building talent, driving results 3

4 Why Executives Get Fired? 1. Mismanaging change 2. Not listening to customers 3. Tolerating low performers 4. Not facing reality Source: Leadership IQ building talent, driving results 4

5 Current Reality Project Delivery for a Purpose building talent, driving results 5

6 Getting A Handle On Risk They couldn t hit an elephant at this dist. Last Words Of Maj. Gen. John Sedgwick building talent, driving results 6

7 Getting A Handle On Risk Components Event Probability Impact building talent, driving results 7

8 Special Purpose Dexterous Manipulator-SPDM building talent, driving results 8

9 Risk Management Model Risk Management Planning Risk Management Planning* Document Identify Risk Identification* Risk Monitoring and Control* Evaluate Execute Analyze Prioritize Qualitative Risk Analysis* and Quantitative Risk Analysis* Plan Risk Response Planning* * PMI Project Risk Management Processes Source: PMBOK Guide building talent, driving results 9

10 Who Else Thinks This Is a Good Idea building talent, driving results 10

11 Identification Inherent to any project Crawford slip technique Interview experts Brainstorming Affinity diagrams Key risk categories Early identification tool building talent, driving results 11

12 Category Examples External Risks Unpredictable Regulatory Natural Hazards Environmental Predictable (but uncertain) Market changes Currency changes Inflation Taxation Internal Risks Schedule Realism Availability Requirements Technical Technological maturity Complexity Customization Legal Licensing Contract ambiguity Lawsuits Financial Competition Strategy Contract type building talent, driving results 12

13 Tools to Assess Risk 0 Decision Scale Low Threat 2000 Threat Analysis Customer Threats Project Schedule Project Complexity Project Environment Project Management Opportunity Strategic Business Resource and Skill New Business Financial Opportunities Scope Overall Opportunities Each area is evaluated on Probability and Impact Threat Score 500 Medium Threat STUDY INVEST High Opportunity Medium Opportunity High Threat AVOID Opportunity Score Low Opportunity building talent, driving results 13

14 Qualification And Quantification Our biases How high is high? Address probability and impact Strive to establish common values Dependent on the environment 100% 50% 0% High Very high Probable probability High Medium Medium probability Improbable Low Low probability Very low 100% 85% 65% 35% 15% 0% building talent, driving results 14

15 Singing in Concert: Preparing for Risks Category WBS # Risk Event (O=Opportunity; T=Threat) Impact Probability Expected Value Priority Rating Risk Response Plan Triggers Structural Integrity of building will be compromised H M HM 1 building talent, driving results 15

16 Response Strategies Avoid Retain Mitigate Transfer List three strategies for every risk Present options to get buy-in building talent, driving results 16

17 Tools and Techniques for Risk Analysis Expert judgment Expected value Decision trees Statistical sums Program Evaluation and Review Technique (PERT) Computer simulation Monte Carlo Decision D 1 D 2 Basic Format Event E 1 E 2 E 1 E 2 Outcome O 1 O 2 O 1 O 2 building talent, driving results 17

18 Current Reality Exponential Fudge Factor % Fudge 10% Fudge 10% Fudge 10% Fudge building talent, driving results 18

19 Probability How Much Will It Cost? Validity Intended use Tie to corporate strategy IRR, NPV, Cash flow, hurdle rate, capex, capital, etc. Top risks Range of outcomes COST building talent, driving results 19

20 Archiving And Lessons Learned One definition of insanity is to do the same thing over and over and expect a different result Albert Einstein building talent, driving results 20

21 Archiving And Lessons Learned Where are your lessoned learned? WBS Task Name Risk Event Probability Impact Strategy Owner Outcome UAT Fail Low High Business driven U/C dev. Me building talent, driving results 21

22 Final Thoughts Establish Baselines Knowledge & skills Competencies Be ready for change Build the case for your opinion Vary your delivery and messaging Describe the decision making process Risk based status meetings Don t be a boiling frog blink! don t be a boiling frog building talent, driving results 22

23 Leveraging Best Practices in Risk Management For Strategic Outcomes Peter Schmidt PDU Credits: 1 Credit Category: 3 Provider ID: 1038 Program ID: PGM410

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