| Risk management is the identification, assessment | | | | get ready. You have a big meeting at work so you |
| and prioritization of risks followed by an allocation of | | | | had to iron a shirt and get you suit on. Because of |
| resources to minimize, monitor and control the | | | | this breakfast is going to be cold cereal, again. You |
| probably of unfortunate events and to maximize the | | | | could decide to read the paper during breakfast but |
| realization of opportunities or investments. The | | | | feel the need to keep the kids on task. You want to |
| strategy to manage risk includes transferring risk to | | | | find out what they have going on so you can keep |
| another party, avoiding the risk, reducing the | | | | tabs on their activities. You are managing their |
| negative effect of risk, or accepting the | | | | development. You have a plan for them and your |
| consequences of the particular risk. | | | | plan does not include a call from the police |
| Risk management is not only a financial concept. | | | | department one day. |
| There are many other types risk management. | | | | It is time to get the kids off to school. One of them |
| Schedule risk management is very common. Scope | | | | catches a bus. You will have to drive the other two |
| risk management is another type that has many | | | | to their school. Thankfully they attend the same |
| applications. | | | | school. There are plenty of risks involved in getting |
| Because this is so important, let's take a closer look | | | | your kids to school and they begin before you get |
| at what this means. First of all, what is considered a | | | | into the car. You had better make sure they have all |
| risk? If we are going to identify the risks we will | | | | of the necessary tools for education in their |
| need to know what to look for. I have heard risk | | | | respective backpacks. If you don't, you risk having to |
| defined as the effect of uncertainty on objectives. | | | | turn around and go back to hand deliver a math |
| That definition is alright but a bit too vague. To | | | | folder to the school. Traveling in a car carries many |
| effectively identify risks for a particular project or | | | | risks other than the obvious risk of getting in an |
| initiative I think you have to be a bit more specific to | | | | accident. Choosing the correct route may be the |
| the objective. | | | | difference between getting there on time or not. |
| We practice risk management in our everyday life. | | | | Hopefully you remembered to gas up the night |
| We do it all day long. Most of us are pretty good at | | | | before because you didn't plan for the extra eight |
| it. We must be because we have made it through a | | | | minutes at the gas station. |
| lot of days without having to scrap the project of | | | | You are a good driver so I'm sure you'll have no |
| life. For example let's look at some events in a typical | | | | trouble getting the kids dropped off and getting to |
| day that would require some risk management. When | | | | the parking lot where you face a new set of |
| you start to think about this, the first thing you | | | | challenges. Unfortunately there typically aren't enough |
| realize is that not only do the events themselves | | | | spaces in the lot so it is critical you get there early |
| require risk management but the interrelationship | | | | otherwise you will be stuck in the overflow lot which |
| between the events requires risk management. Let's | | | | is a long ways from the entrance to the building. You |
| say it is Monday so you have to get up and go to | | | | have lots of materials to bring into the office for a |
| work. The process that results in you sitting at your | | | | big presentation. It looks like rain and you don't want |
| desk at work is fraught with danger, but somehow | | | | to get you graphic boards wet. If you are stuck in |
| you manage it, every day. | | | | the overflow lot your presentation is doomed for |
| Here is a list of things you might do to get to work | | | | sure. You have to watch out for kamikaze drivers in |
| in the morning: | | | | the parking lot. The competition for the final spots is |
| Shower | | | | heated and you don't have time to bring the car to |
| Shave | | | | the repair shop so you stay back and take what you |
| Get Dressed | | | | can get. |
| Get the Kids Up and Ready | | | | Luckily you find a spot in the main lot but it is starting |
| Make Breakfast(Let's pretend we do this every day) | | | | to drizzle a bit. You try to cover up your |
| Drop the Kids off at School | | | | presentation boards with your suit coat. It works well |
| Drive to Work | | | | enough and you make it to the office but some of |
| Park the Car | | | | the ink from the boards gets on your jacket. You will |
| Walk from the Car to the Office | | | | either have to run the jacket out to the 1 hour |
| Each and every one of these events is important | | | | laundry or go it without. You decide to go without a |
| and impacted by different outside influences. To | | | | jacket so you can put the finishing touches on you |
| make things a little bit more challenging, your spouse | | | | graphics. Thirty minutes before the presentation you |
| is out of town on business. You must accomplish this | | | | find out the presentation has been changed to a |
| all by yourself. I know you may be thinking about | | | | video conference. You have just minutes to |
| bailing out already but hang in there, you can do it. | | | | compose the electronic files into a presentation and |
| Besides I will walk you through it. | | | | send it off to the client. |
| The first step is to identify your objective. We know | | | | You did it! You made it to work. Again. You are an |
| your objective is to get to work so we have a good | | | | expert at risk management. |
| start. Defining the objective is not always so easy. | | | | Most people are pretty good at risk management. |
| Before you jump right into the shower you have to | | | | We all get a lot of practice. The dynamics of |
| first make a plan to meet your objective. You have | | | | business risk management are similar dynamics to |
| to have a plan! If you don't, trust me you will be | | | | those that we encounter every day. The nature of |
| getting a call at about 9:30 from your wife asking | | | | impacts and influences is also the same. As progress |
| why the kids were late for school and your boss will | | | | along the path to meet our objective we are |
| be waiting at your desk when you get to work | | | | bombarded with adversity. In the process of putting |
| wondering where that report is that you promised to | | | | together our risk management plan, we identify the |
| deliver first thing. | | | | risk areas, assess the impacts and decide how to |
| Now about that shower, but wait, if you start to | | | | manage and control the risk areas. This initial planning |
| wake the kids up before you get into the shower | | | | gives us the ability manage the adversity. |
| maybe by the time you are out of the shower they | | | | Like when you decided to skip the full breakfast we |
| will be ready to get up. At least go turn the lights on | | | | can choose to avoid risk. We can choose to minimize |
| in their rooms. I like to flicker it a few times. It really | | | | the negative effect of risk like you did when you |
| bugs them but is an effective move. You could start | | | | decided to go without your jacket rather than spend |
| the coffee brewing before you get in the shower as | | | | the time to bring it to the cleaner and carry the risk |
| well. Every little bit will help. And don't forget to let | | | | of not completing the presentation. You could have |
| the dog out to go to the bathroom. If you don't you | | | | transferred some risk to another party if you would |
| may be sorry. | | | | have called your sister who lives down the street |
| I think it is safe for you to get in the shower now. | | | | and asked her to bring your kids to school. Of course |
| You have a few things started that will be working | | | | there would have been a cost associated with that. |
| while you are taking your shower. You could take | | | | You would have had to mow her lawn or something |
| one of those long lazy showers but that would carry | | | | like that. |
| some schedule risk so it might be better to wait until | | | | Risk milestones are interrelated and connected by |
| Saturday for that. Finish your shower. Before you | | | | chronology or timeline. You reduced the risk of |
| start to shave, go flicker the lights in your kids rooms | | | | getting your kids ready by turning the lights on |
| again because they likely are not up. Raise your voice | | | | before your shower. Likewise you started to brew |
| and use the angry dad tone when you tell them to | | | | the coffee before you show as well. |
| get up this time because now it is time to get | | | | The key to effective risk management is to have a |
| serious. If they don't get up now you will be late for | | | | system that has measurable results. Risk |
| sure. | | | | management for property development can be tied |
| You can go shave now and get ready for work. The | | | | into a milestone schedule to assess and measure risk |
| risk involved in shaving is pretty low unless you are | | | | as it applies to scope schedule and budget. |
| still using a razor and haven't switched over to an | | | | Risk management is a key to success in business. |
| electric. Hopefully you remembered to charge your | | | | Most of us are very well equipped to manage risk |
| electric otherwise you may need to proceed to work | | | | effectively. Our everyday activities prepare us well. |
| with a 1 day shadow or three day if you like to let it | | | | You can find numerous parallels in everyday life. |
| go over the weekend. Getting dressed can carry | | | | Make a plan for risk management. You will be glad |
| some risk depending on what type of work you do. | | | | you did. Check out my upcoming articles and I will |
| The risk is mostly in selecting what to wear. For | | | | outline for the primary levels of risk management and |
| most people, in this day and age, this is a low risk | | | | provide you with detailed description on how to build |
| area. | | | | a risk management plan to help you succeed in the |
| Remember to keep the kids on task as you are | | | | new economy. |
| getting ready. You decided to take a little longer to | | | | |