Risk Statements

Program managers must lead in an environment of uncertainty. Risk management processes provide structure to handle this uncertainty. The uncertainty by itself is challenging enough, but if it is not handled with consistent methods, it escalates. Therefore, the program manager needs to create a proactive and positive culture when it comes to risk management.

This 6 part Guide to Program Risk Management will help you identify risks and walk you through the process to assess impact and involve stakeholders.

Part 1 of 6: The Program Manager’s Risk Environment
Part 2 of 6: Risk Statements
Part 3 of 6: Likelihood Scales
Part 4 of 6: Establishing Adequate Reserve
Part 5 of 6: Risk Attitudes
Part 6 of 6: Be Success Oriented

Part 2 of 6: Risk Statements

Good risk identification creates good project communication, and good communication creates good decisions. All this hinges on the risk statement.

A well-written risk statement puts leaders in a position in which a decision must be made or they understand the clear and present danger of not making a decision. The risk statement is one of the biggest opportunities to effectively communicate within and outside the project team.

A well-written risk statement should compel the decision maker to (1) act or (2) understand the consequences of inaction.

There is unanimous agreement that successful project management requires effective communication, and the program manager is responsible for making that happen. You must have a risk statement that adequately communicates the impact of the risks so that stakeholders understand the reality of the clear and present danger. The risk statement must communicate the impact from the stakeholder’s perspective.

To properly understand the context of the risk domain, as the program manager you should require the project managers to document risks in this manner: “If __________ happens, then there will be an impact to __________ cost, __________ schedule, __________ scope, __________ politics, _________ whatever else matters (WEM) in your program/organizational context.”

When you put these impacts in the stakeholder’s terms in the risk statement, you are communicating with the stakeholder in a manner that puts the stakeholder in a position to make a decision, a position to act.

Assessing all the impact domains indicates to everyone involved that a thorough job of understanding the risks has been performed.

In the case of risk management and most aspects of project management it is important to begin without requiring a high level of detail. Detail kills! Teach your project managers that use of detail is a strategic decision and should be deployed only when absolutely necessary.

In other words, you do not want the team investing a lot of time in a precise analysis of what these impacts are without an initial assessment that does not require a lot of resources. On the basis of the magnitude of the impacts, we can then determine whether further detail is required or the already high level of detail is acceptable.

When all the risks are identified and their impact domains are characterized, the program manager needs to come to an agreement with each project manager about which risks will be actively managed and where the line will be drawn on the project’s risk lists. Risks above the line will be actively managed; risks below the line will just be monitored and reassessed at the next appropriate time (usually the next milestone). This line is communicated to program sponsors and stakeholders as appropriate but is definitely understood between program manager and project manager.

Saying, “We didn’t think about that,” is poor program management. Saying, “We identified it, assessed it, and made a conscious decision not to manage it based on available resources,” is an acceptable answer.

Once your team has decided on their plan and process, PPM software can help you execute that process. WorkOtter helps you successfully execute your program process strategy for project success. Get a demo of WorkOtter and see how we can make your program management effective.

“The Handbook of Program Management: How to Facilitate Project Success with Optimal Program Management, Second Edition” by James T. Brown is a copyrighted work of McGraw-Hill and McGraw-Hill reserves all rights in and to the Content. ©2014 by McGraw-Hill Education. Purchase the book on Amazon.

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