How well are you managing risks?

If you have studied anything about risk management at all,
you will be familiar with what I will call the "technical
aspects of risk management".

But let's take a step back for a moment and ask, "What is the true essence of risk management?"

Risk management is not just something that we can apply and
execute according to an impersonal set of steps or
procedures. There is something much deeper to practicing sound
risk management.

In many ways, risk management is more of an art than a science.

One side of risk management, less often, if ever, discussed is what I will call it "personal
aspects of risk management", as distinguished from technical aspects of risk management.

To expand your thinking into the realm of personal aspects of risk management, here are some distinguishing factors between the technical and personal aspects of risk management:

TECHNICAL ASPECTS OF RISK MANAGEMENT

  1. Front-end risk evaluation
    • Risk identification: Stakeholders identify risks
    • Risk assessment: Stakeholders estimate probability and impact
      for each risk
    • Mitigation planning: Stakeholders choose risks to mitigate
      and determine Courses of Action
    • Preventive actions planning: Actions aimed to prevent
      risk occurrence are incorporated into the plan and
      schedule by project management team
    • Remedial actions planned: Actions to be taken in
      case of risk occurrence are planned and documented
      by project management team
  2. Back-end risk management
    • Risks monitored during execution and control: Project management team
      monitors, particularly those associated with remedial
      actions
    • Take remedial action on risk occurrence: When
      triggered, project management team executes planned actions

Now that was a more technical, procedural approach. Now let's turn our attention to the softer side, the personal aspects of risk management.

PERSONAL ASPECTS OF RISK MANAGEMENT

  1. Risk management is thinking - Thinking things through
    has intangible aspects and is part art and part science.
  2. Risk management is being open minded - Thinking outside
    the box when considering risks can pay great dividends.
  3. Risk management is facing the facts - It is important
    to separate emotional from logical thinking in order to
    acknowledge real risks.
  4. Risk management is about capturing all the facts - Thoroughness
    has its rewards, as you don't want to miss anything,
    but just make sure and capture ALL of the big risks.
  5. Risk management is action oriented - Execution is
    critical - whether to prevent a risk occurrence, or to
    monitor and respond to one.
  6. Risk management emanates from the core of who you
    are - There are "intrinsic" aspects of risk management
    that can only come from the depths of who you are -
    morally, ethically, and attitudinally.

Risk management is often treated as a stark, technical exercise, and in many ways it is! However, it is more than that, and it can be done more effectively with a broader approach. When you do risk management, try to ensure you take into consideration the personal, more soft skill-oriented side of things. It will enable you to take a more holistic and effective approach to risk management.

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