Whatever the risks associated with your projects, it is how you manage (or don’t manage them) that will define the ultimate success or failure. After all that’s what projects are essentially: large scale exercises in managing risk.
As David Hillson very aptly illustrates in this extract from his wonderful little book ‘Exploiting Future Uncertainty’ it’s worth taking some time to consider how to encourage everyone involved in your projects to assume responsibility for managing risks.
Although most people would agree that risk management is “A Good Thing”, it is still widely practised with a lack of enthusiasm and commitment. If we want to motivate people and organisations to treat risk management more seriously, it might be worth considering established motivational theories. One of the best known of these is Abraham Maslow’s “Hierarchy of Needs.”
Maslow suggested that humans are motivated by the drive to satisfy a range of different needs, but not all needs are equal. He arranged needs into a pyramid in order of their strength of influence as motivators, as shown here:
He believed that people are driven to satisfy lower needs before higher needs exert any influence. So for example, the most basic needs of air, water, sleep and food must be met first, and these are the over-riding concern of each individual, even more important than being safe or feeling self-esteem. Once these are satisfied a person is free to be concerned about other things. As each level of “hunger” is met (with literal physical hunger at the lowest level), higher needs emerge which require satisfying.
Maslow’s hierarchy is divided into two groups, with “deficiency needs” towards the base, and “growth needs” at the top. Deficiency needs are mostly physical and emotional, and they must be satisfied or a person will feel anxious and incomplete. Growth needs by contrast are psychological and spiritual, and they are not essential for a healthy existence, but they make a person more fully rounded and complete.
How is this relevant to the challenge of motivating individuals and organisations to manage risk? The two levels of Maslow’s hierarchy explain why risk management matters:
- Deficiency needs are about survival, which means responding to threats. In risk management terms, this is the realm of business continuity and disaster recovery, which aim to protect the business and ensure corporate survival, as well as operational risk management, health & safety, and a project risk process that addresses technical threats.
- By contrast, opportunities appear in Maslow’s hierarchy as growth needs, since they are risks that, if they occurred, would have a positive effect. These exist in such areas as marketing and business development, as well as strategic decision-making, and they can also be found at project level in the form of project opportunities that help us to work faster, smarter or cheaper.
It is interesting that Maslow’s Hierarchy of Needs predicts that where there are limited resources for risk management (which is most of the time), it is natural to address threats before opportunities, since threats operate at the lower levels of the hierarchy and lead to deficiency needs, whereas opportunities exist at the higher levels and are therefore seen as lower priority. However just as Maslow encourages us to address all needs at every level in the hierarchy if we are to become whole people, so the best approach to risk management is an integrated process which seeks both to minimise threats and maximise opportunities.
How can this understanding help us to motivate people to use risk management properly, not just in order to comply with procedures or standards, but as a positive contributor to project and business success? Maslow teaches us that needs exist and they must be satisfied, and that not all needs are equally important. Risk management must be seen to meet the needs of both individuals and organisations, providing real assistance as we respond to the challenges of our projects and business. We should recognise that dealing properly with risk will minimise our exposure to harmful threats, and fulfil our most basic needs for project and business survival.
The best approach to risk management is an integrated process which seeks both to minimise threats and maximise opportunities.
Maslow also emphasises the importance of an integrated approach addressing both deficiency needs (threats) and growth needs (opportunities). Including opportunities within our risk process will take us beyond mere survival into positive areas that create competitive advantage and sustainable growth.
We will only motivate people to take risk management seriously if we can demonstrate that it meets real needs, and Maslow points the way.
Too Busy? No Way!
What if people resist, complaining they’re too busy to add risk management to their normal job? Well anyone who is too busy for risk management is too busy! People who have no time to think about potential problems in advance, always manage to make time to fix problems when they happen. A combination of the following eight steps should encourage them to adopt risk management:
1. Mandate it
If you can, it might help to insist that a structured risk management process must be implemented. While it is not the whole answer, it sometimes helps to tell people what to do. If your company procedures include a risk process, then you can refer to this and explain that there is really no choice.
2. Simplify it
Risk management need not be complicated. Make the process as simple as possible without compromising effectiveness. Minimise the overhead, keep risk meetings short and focused, and only collect information that you intend to use.
3. Normalise it
Explain that managing risk is a “normal task” for everyone, and it is not an optional extra. Every business or project is risky, and risk management needs to be built into every part of it. Plan and review risk responses the same as other tasks, and expect your team to treat them just like any other task.
4. Demonstrate it
Managers should lead by example, and be a role model for their team. If they show they are serious about identifying and managing risk, and actively do it themselves, the team are more likely to follow the example.
5. Use it
When risk reports are written and forgotten, people will learn that risk management is not important. But where the direction and strategy is adjusted in the light of risk information, they will see that their efforts make a difference to how the business or project is run.
6. Update it
If the Risk Register is produced once and never updated, or agreed responses are not reviewed and monitored, the risk assessment will quickly become outdated and useless. Ensuring that current risk exposure is understood emphasises the importance of the risk process.
7. Celebrate it
Look for proof that risk management has tackled a threat so that a problem was avoided, or evidence that a potential opportunity has been converted into a real advantage. Record these successes and tell people about them. Success breeds success.
8. “Pull” it
Seek the support and buy-in of senior management. When the boss asks for risk information as part of governance, people will know that it matters.
These steps should ensure people know how importantly the company views risk management, and should encourage them to take it seriously and do it themselves – because it works!
Extracted from Exploiting Future Uncertainty by David Hillson, 2010, 9781409423416, Gower Publishing, Farnham. Available to read in full on www.gpmfirst.com
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