Risk management - but the right way

What risk management needs

Here are two concrete measures to ensure that risk management in projects takes flight:

• Systematically derive risks
  A risk register often consists of randomly identified, loose individual risks that have little connection to each other or to the project. In my opinion, every project has exactly one main risk, namely that the desired project success (which must be defined) is not achieved or not achieved sufficiently. All other risks are derived from this main risk. This gives rise to integrated project risks such as the project costs exceeding the project budget, the project taking longer than planned or the expected quality and the resulting benefits being lower.
• Identify risk levers
  Although risks and their effects are described in detail, it is unclear what options exist for influencing the individual risks. To do this, we need the so-called risk levers, which can be changed and have an influence on the probability of the risk occurring and its impact. The measures to mitigate a risk are then based on these levers, making them very effective and controllable.

Analogies in sport

As every project is unique, it is difficult to find a suitable, generally applicable example that is understood by as many people as possible. I would therefore like to use a neutral example from the world of sport to show how effective risk management can be established. In doing so, I will take into account the two tips mentioned above: a) systematically derive risks and b) identify risk levers.

I use the sport mountain biking as an example. Similarly, skiing, surfing, climbing, hiking or another sport could also be used. These sports are generally considered risky, but not extremely risky. In general, this risk assessment is correct, but it can range from low to very risky depending on the route and environment. To describe this, let's take a look at the sub-disciplines of mountain biking. For example, cross-country, i.e. riding on paths and narrow trails, is generally much less risky than the discipline of free riding with large, difficult jumps or downhill with fast and extremely steep descents, where the demands on man and bike increase dramatically. However, as mountain biking mainly takes place in the great outdoors, the demands can also be mixed on a route. For example, a cross-country rider may suddenly find herself in front of a very steep, steep section of trail.

1. The risk tree

The main risk in mountain biking is not reaching the goal. The goal is usually to ride a route, e.g. as training, for a competition, to explore an area or simply because it's fun. In mountain biking, there are four areas that have to work together: the person, the bike, the route and the environment. With this structure, the following risks can be derived from the main risk:

• Inadequate condition of the rider due to illness, accident, lack of stamina or inadequate riding technique
• Technical defect on the bike
• Closed route due to maintenance, damage or other use
• Bad weather or an event that comes in between

Such a risk assessment raises awareness of the dangers. Nevertheless, it still doesn't help the mountain biker if he/she is already on the saddle. You can only be “a little more careful”. That is why it is now important to address the levers of risk in order to positively influence the risk of accidents.

2. The risk levers

The four areas of man, mountain bike, route/obstacle and environment, which come together in mountain biking, also include the levers that have an influence on riding and thus on the risk of accidents.

• The person, i.e. me as a mountain biker, contains the levers: skills (ability and experience), physical and mental performance and resilience, equipment and daily form.
  The first three levers are built up over the long term (e.g. through training and experience), while daily form “emerges” in the short term. An objective (self-)assessment plays an important role in all levers for people, so that you do not underestimate or overestimate yourself in a situation.
• The mountain bike is the tool that gets you from A to B. That's why it's important to use the right vehicle for the route ahead. The most relevant levers are: the type of bike and its geometry, the tires, brakes and suspension.
  The bike must suit the rider. Ideally, the right bike should be selected for the route ahead, i.e. a cross-country model for cross-country routes and a downhiller for steep, fast descents. However, most mountain bikers typically only own one bike and cannot choose from a fleet of bikes. This limitation to a single bike severely restricts the intended use and the routes that can be ridden, and increases the risk of accidents if the bike is not suitable for the route.
• The course or obstacle to be mastered includes the levers: surface/adhesion, incline (up and down), speed, jumps if necessary, riding technique to be used and possible fall area in the event of a fall.
• The environment contains the levers: wind and weather, the surroundings, the social environment, the view, your own schedule in the coming weeks/months, and the unknown.

With the concrete specification of the levers and their elements, the general accident risk in mountain biking (in relation to one's own situation) can now be described and assessed with the probability of occurrence and impact, and specific measures based on the levers can be defined which reduce the probability of occurrence and/or the impact when the risk occurs. This includes learning certain skills and procuring more suitable equipment or bike parts. Conversely, in a specific situation where I am facing a more difficult descent or a bigger jump, the defined levers can help me to better assess the situation and make risk-appropriate decisions.

Benefit for projects

How does this example from sport help in projects or in the organization? The model can now be adopted and adapted as follows. Replace the person with the team, the mountain bike with tools, methods and techniques, the route/obstacle with the problem and adapt the environment to the project accordingly (e.g. stakeholders, regulations and directives, requirements and framework conditions). This provides the project and the organizations involved with comprehensive, systematic risk management, where the risk levers are known and measures can be based on them. In addition, the levers can be used to provide the appropriate basis for decision-making in day-to-day operations or for important decisions, thereby enabling risks to be taken consciously and supportively or unnecessary risks to be avoided.

Give it a try. Don't leave your project to chance. And if you need professional support, feel free to contact me.

PS: The flying mountain biker in the picture above is not me, but my son.