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While risk management is widely recognised as an integral part of Project Management, it merits special attention. This is because:
- Risk management is widely misunderstood, so gets insufficient attention - itself a risk
- Special skills are needed to consider, identify and confront risks, let alone manage them
- Some of the most important risks are the hardest to monitor, quantify, or even know
Responding to these challenges, and working closely with clients tackling real problems in product innovation, we have developed a new conceptual framework, tools and good practices for ‘Mastering Risk’, building significantly on recognised international standards.
Our Mastering Risk for Innovation Programme is rigorous, standardised, simple, practical, and applicable to diverse business projects and functions. Distinctive elements include:
Builds the right mindset and culture
- Promotes receptivity to discuss risk and true sharing of risk
- Makes Risk Management something that busy professionals actively want to learn about
- Positions risk as something to embrace as an opportunity, not just a threat
- Establishes 'calculated risk-taking', not 'risk aversion'
- Shifts the bias from 'easy-to-measure' risks to ones that are priorities even if hard to understand
Builds a true organisational capability
- Makes Risk Management integral to the innovation and product development processes
- Incorporates Risk Management into real-life project management routines
- Embeds both the 'hard' tools and 'soft' skills essential for effective Risk Management
- Embeds good practice throughout the organisation
- Establishes a true competence in using tools and communicating risk
Develops effective communication of risk
- Equips people to communicate risk in a constructive way
- Shows how best to engage stakeholders who need to play positive roles in managing risk
Achieves the desired outcomes:
- Reduces dysfunctions
- Increases rate of successful innovation
Key Elements in the Mastering Risk Programme
Our programme provides all the elements required by any organisation in developing an approach to risk management which is fit for the ‘innovation age’: a Methodology, Tools, and Practical Skills Training.
Our ‘Six Easy Steps’ methodology makes risk management an iterative, step-wise process. It is grounded on established international standards together with our direct experience as practitioners. We embed the Six Easy Steps as an instinctive organisational process, so that they become practised in risk management conversations, and used to develop the capabilities of both existing and new staff.
Our Tools are aligned with each of the Six Easy Steps. They include not only ‘hard’ tools to assess and report risks but also ‘soft’ tools to equip people for communicating risk, and engaging stakeholders. The Tools include Models, Definitions, Look-up Resources, Processes, Exercises, Templates, Communication formats, Thinking Prompts, Guidelines, Benchmarks and Measures.
Practical Skills Training
Our Training Programme transfers and embeds all the skills needed to Master Risk, leaving the organisation fully-equipped and self-sufficient. We make our Toolkit available on the organisation’s intranet, for reference and use by people from any function involved in managing risk (not just formal ‘risk managers’). We add training courses tailored to the organisation's needs, and one-to-one coaching for key staff.
Our Definitions of Key Terms
Risk: 'An uncertainty that matters' - the chance of something happening that will impact on objectives. It is measured in terms of the likelihood of an event and its impact. There is always potential for events and impacts that bring opportunities (the ‘upside’) as well as threats (the ‘downside’). Managing risk is as much about grasping opportunities as mitigating threats.
Risk management: An iterative process to continuously improve decision-making. It is an integral part of good management practice. Risk management is increasingly concerned with both positive and negative aspects of risk.
Mastering Risk: The skilful use of tools to anticipate and deal with uncertainties that affect objectives - seizing opportunities as well as avoiding or mitigating losses. This promotes productive and powerful conversations about the sources and management of risk.
The Six Easy Steps to Mastering Risks
1: Map and engage stakeholders
2: Identify and articulate risks
3: Assess risks
4: Plan for treatments and contingency
5: Sign up with stakeholders
6: Apply ‘treatments’
Recognising the importance of new product development to their business, the company engaged us to support a systematic review of the lessons to be learned from projects where unforeseen problems in formulating products had led to serious costs and delays in manufacture, distribution through the supply chain, and use.
One of the main conclusions from this review was the need to introduce and embed a single approach to risk management in new product development in the company. We were accordingly engaged to:
- Develop a toolkit for risk management, based on international standards for methodologies and good practice, and integrate this with the company’s own processes
- Train product development professionals - scientists, engineers and managers - to help them embed practical risk management in their everyday work.
Our sponsors required an approach that would deliver calculated risk-taking with minimal ‘dysfunctions’. Special challenges arose from the need, firstly, to deal with diverse projects located in different sites and geographies, with many types of risk; and, secondly, to develop both organisational and individual capability, especially in communicating risk, within and between projects and across the organisation.
We created a joint team to run the project. Critically, this included senior managers with the authority to make agreed changes ‘stick’, given the wide-ranging changes in working practices and behaviours needed to adopt and embed effective risk management.
Developing the Toolkit for Mastering Risk
We created a framework for Mastering Risk - the ‘Six Easy Steps’. This recognised the complexity of the product development process, taking from two to five years typically, and involving several ‘stage gates’ at which key decisions have to be made, with each needing to be informed by a sound understanding of risk.
The Mastering Risk Toolkit was developed jointly. Existing risk management materials were collated from within the company and from the external project management community. Our specialist in risk and governance led work to develop an initial framework which accommodated existing client material, was grounded in international standards, and drew upon international good practice.
The assembled Toolkit included some 40 discrete Tools - Models, Definitions, Look-up Resources, Processes, Exercises, Templates, Communication Formats, Thinking Prompts, Guidelines, Benchmarks, and Measures. There was a mix of ‘soft’ tools to support group thinking and ‘hard’ tools to assess, track and report risk. Particular stress was laid on developing clear high-level frameworks (to help staff understand risk) and communication formats (to support rapid and effective communication with stakeholders).
The Toolkit was thoroughly tested to ensure that it could be used globally and yet was adaptable to local needs. We ran four pilot exercises to simulate use of the Toolkit in ‘live’ projects. This helped to refine the Toolkit but and to deliver some immediate practical benefits.
Training professionals in Mastering Risk
Our training programme not only disseminated the Tools but also developed risk management competencies and behaviours. The focus was on getting the Tools effectively understood and used in practice - not just ‘mechanically’, but with excellent judgement.
We developed and provided bespoke training courses for some 50 staff at the company’s three main R&D centres in Europe and the USA. Those involved came from a range of projects and had very different levels of experience. We designed the two-day training course to maximise interaction and collaborative working, so that participants could share their experiences effectively and learn from each other.
So that participants would be able to use the Toolkit immediately after the training, it was made available through a company-wide, easy-to-navigate, IT platform. Practical roles and responsibilities, including functional management support, were also clarified.
Senior managers reinforced this practical approach by requiring specific Tools to be used to inform key stages in the product development cycle. Active engagement with stakeholders both within and outside the function was encouraged. The IT platform provided not only a knowledge management function but also a basis for organisational learning - by collating evidence to inform risk analysis in future projects.
To complete the Mastering Risk Programme, we worked with Line Managers and Team Leaders to create a project-by-project plan to develop risk management skills within the function and ensure ongoing learning. We also coached internal project leaders. Senior managers also put mechanisms in place to support the ongoing development of the Toolkit, knowledge management and organisational learning.
Feedback from Senior Managers and the training workshop participants (whatever their location and level of experience) indicated that they valued the quality of the ‘Six Easy Steps’ framework and the Toolkit. The process was clear and they knew what they needed to provide at key decision stages. They also welcomed the communication formats. Overall, there was strong buy-in from staff and stakeholders.