Risk and Opportunities

Recently attended a webinar by The IET and ACostE, by Tony Reid - Back to Basics: Risk and Opportunity. You can try and view the webinar here: https://communities.theiet.org/communities/events/item/27/10/26723 

You should be able to view the video recordings after registration. 

Meanwhile, I thought it was worth sharing some key points and learnings, especially for those who manage and run projects.

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Life is full of both risk and opportunity.

We need to UNDERSTAND and learn to recognize the potential benefits. For example, when faced to decide whether to do a career change:

• Risk: To you, your family, or both
• Opportunity: For you, your family, or both

Give it a thought... On the pros and cons. 

On top of HRSG16 (during internship, circa. April 2009)

Fear of risk is normal and natural. We should try to deal and manage it, or if possible, turn it into something positive. It brings out the best in us. Dealing with fear often leads to success. So don't fear 'Fear'. As the saying goes, the first thing after falling off the horse, is to get back up again. 

Can we transfer the risk to someone else (like a supplier)? Before getting the answer, we should know why are we trying to transfer or subcontract it. Is the risk:

• Too trivial or minimal that we will be wasting our time? You need to think more about it. It may not be as trivial as you first thought.
• Too serious that we do not have the resource/skills are not able to manage? You need to accept that the 3rd party may not access the risk as you do, and may rate it as trivial.

In both the above scenarios, we should understand the risk, and assign it to the most suitable responsible person. 

Nevertheless, there is always a tendency to ignore a risk after identifying it, like to assign a low likelihood (unlikely). We need to remember that projects are dynamic, and situations can change.  

There is always a possibility to use risk to identify opportunity. With innovative ideas, we can leverage and convert risk into opportunity. As humans, we are good in turning negatives into positives. On the other hand, an opportunity could also bring risk.  

We can choose 2 paths:

• Risk Aware - Accept that life is full of risk, and we need to address the risk. "Recognize and manage".
• Risk Averse - "Recognize and avoid".

We can choose which philosophy we prefer. No wrong or right. 

You can take huge risk and "live on the edge" (as life is too short). BUT don't drag others over the edge. 

Risk Evaluation:

1. Identify risk
2. Agree on the philosophy (Address or ignore the risk / passing to someone else?)
3. Consider probability (of occurrence) and impact - Risk matrix. NEVER ignore a risk, be it high probability or low. If it has high impact but low probability, we should still treat it seriously. 
4. Mitigation and actions - Leaving it to others may not remove the eventual consequences. 

On a personal level, it is always desirable to be in a position to manage the risk (Ownership). 

Risk Management Process:

1. Risk identification (Risk register)
2. Analysis and quantification - Risk matrix
3. Mitigation and actions (for each risk) - Who is responsible/best placed/most involved to manage the risk
4. Contingency - Amount added to budget to cover cost, based on resultant level of confidence (in percentage), using cost-risk analysis. It should consider best case, worst-case, most likely case. 
5. Management - Continuously observing each risk, team-wide. Always have risk as an agenda item during meetings, even if it is to report no risk. 

To wrap up:

"He who is not courageous enough to take risks will accomplish nothing in life." (Muhammad Ali) 

"Only those who will risk going too far can possibly find out how far one can go." (T S Eliot)

Prepare and develop yourself - Grab the opportunity when it comes

Credits to Tony Reid, the IET and ACostE for organizing the webinar.