Project Risk Myths Debunked
If we were to look up the definition of the word myth, we would find that one definition is that a myth is a “widely held, but false belief or idea.” In many respects a myth is much the same as a false assumption – “factors that, for planning purposes, are considered to be true, real, or certain without proof or demonstration.” In other words, if we know that a belief is false, then it is not an assumption. Also, if we know something to be verifiable then it is not an assumption but a fact. Importantly, all assumptions are risks and should therefore be recorded and subject to risk analysis.
Myth 1: All risk is bad. Risks are potential problems, and if they happen then we are in trouble. The Truth. Risk includes both threats and opportunities, and both need to be managed proactively. Opportunities can save time or money, enhance performance, and help us to achieve our project objectives. Admittedly, there is more might do wrong than better.
Myth 2: Risk management is a waste of time. Most risks are outside our control, and it is impossible to address them in advance. Instead we will deal with any issues that arise. The Truth. If we deal with risk effectively, then we will not have so many issues to tackle!
Myth 3: What we do not know will not hurt us. Maybe we will be lucky and risks will not affect us. Ignorance is bliss! The Truth. Risks can hurt us, our business or our projects. Avoidable problems will happen and benefits that could have been captured will be missed. Not knowing about risk can be very costly.
Myth 4: The Risk Manager manages risk. We don’t need to manage risk – we have a Risk Manager. The Truth. Every member of the team should be a “risk manager”, tackling risks that affect their area of responsibility. The Risk Manager should facilitate the risk process to ensure that it is effective.
Myth 5: All risk can and should be avoided. We will do whatever it takes to ensure that risk cannot happen, no matter what cost or effort is involved. The Truth. Not all threats can be avoided, and sometimes avoidance is too expensive or takes too long, so another strategy is required, such as transfer, reduction or acceptance.
Myth 6: Our business and projects are not risky. Absence of risk is a sign of success. Where risk appears, it needs to be removed as quickly as possible. The Truth. Risk is built into all business and projects, linked to reward, as we take risk to create value.
Myth 7: Risk management requires numbers. Only quantitative risk analysis can reveal the true level of risk exposure. The Truth. Quantitative risk analysis is powerful, but it is often not cost effective. Many risks cannot be easily quantified either, so a qualitative approach is always needed.
Myth 8: Risks are covered by existing processes. We have processes to deal with all our routine risks, so we do not need to do risk management. The Truth. What about risks that we have never experienced? The risk process should identify novel risks, assess their importance, and develop targeted responses.
Myth 9: Contingency is for weak people. A strong manager meets all targets, and does not need extra time or money for things that might never happen. The Truth. No-one can foresee the future and including a risk budget for known risks and contingency for unforeseen risks is a sign of wisdom not weakness.
Myth 10: Risk management does not work. The risks we identified never happened, and our responses made no difference, so we gave up. The Truth. Perhaps we missed the real risks, had ineffective responses, or failed to implement agreed actions. Done properly, risk management always works! Tackling these risk myths and implementing the proposed solutions will ensure that our risk management is grounded in reality, giving us the best chance of success.
Free Book. For a very comprehensive explanation about managing project risk please click here for my free book, the opening paragraph of which reads – “Herodotus, an ancient Greek historian, has been referred to as “The Father of Lies” due to his tendency to report fanciful information. However, the above quote, at least, is perfectly true – significant accomplishments are rarely possible without taking risks. The ‘no free lunches’ mantra applies. Those who desire a reward need to be willing to expose themselves to risk. In fact, a no-risk project would not be worth pursuing, although of course there are no projects that are free of risk. Projects are unavoidably risky and this book explains how we should manage that risk to improve the likelihood of our project’s success.”