Get risk management right

Getting risk management right is not that complicated. Only 2 steps:

  • Step 1 – stop doing risk assessments on a schedule (quarterly, monthly, whatever) and start doing risk assessments as part of the important decision preparation, when and where decisions are taken. Do the risk assessments when preparing the decision proposal for the decision makers. There are plenty of decisions to choose from, pick whatever decision is most material, uncertain and understood by you.
  • Step 2 – stop using risk assessment techniques, that are guaranteed to produce inaccurate and deceitful results, like likelihood x consequence assessments, qualitative blah blah heat maps and so on. Use proper math and decision theory. Present results not as risk levels or colors, present information about risks as the effect on objectives or decision (XX% chance of exceeding the budget, XX% of completing the project on time or below, XX% chance of significant extra costs between X and Y, NPV between X and Y at 95% confidence interval, etc.)

That’s it. Simple :))

Check out other risk management books

Implementing Enterprise Risk Management: From Methods to Applications (Wiley Finance)
Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management
The Standard for Risk Management in Portfolios, Programs, and Projects

RISK-ACADEMY offers online courses

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Informed Risk Taking

Learn 15 practical steps on integrating risk management into decision making, business processes, organizational culture and other activities!

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ISO31000 Integrating Risk Management

Alex Sidorenko, known for his risk management blog http://www.riskacademy.blog, has created a 25-step program to integrate risk management into decision making, core business processes and the overall culture of the organization.

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Управление рисками

В этом коротком и очень увлекательном курсе, Алексей Сидоренко расскажет о причинах внедрения риск менеджмента, об особенностях принятия управленческих решений в ситуации неопределенности и изменениях в новом стандарте ИСО 31000:2018.

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