The Program Manager’s Risk Environment

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 1 of 6: The Program Manager’s Risk Environment

The program manager’s risk environment is complex, because risks at the business level, program level, or project level can affect the program. That is why categorization of risks facilitates better risk identification activities. Additionally, the program manager must scrutinize which business- and program-level risks project managers should address. Just as the program manager filters and decides what project managers need to address, the project manager has to filter and decide what project-level risks are shown or escalated to the business level. The business level would be overwhelmed if its managers saw or even knew about every project-level risk.

  • Business-level risks are numerous and include increased government regulation, globalization and outsourcing, technology changes, changes in competition, changes in demand for the products and services provided, ownership changes occurring through merger or buyout, and rapid expansion or contraction of the products and services provided.
  • Program-level risks include budget cuts, reorganization, turnover of program personnel, stakeholder changes, cost overruns, and failed projects.
  • Project-level risks include resource availability, implementation risks, technology risks, and changing stakeholders.

Informing Stakeholders
Risks in a program can be represented by using an iceberg analogy. Certain risks are obvious and are seen by everyone; others are below the surface. A diligent program manager must know what’s above the surface as well as what’s below. The difficult program management question is: How much of what’s below the surface needs to be communicated to stakeholders?

Similarly, the program manager has to determine the degree of necessity to make stakeholders aware of all risks and any benefits of doing so. The other side of this coin is that stakeholders should never be surprised. When stakeholders know about the risk and the potential response and mitigation plans, psychologically they are in a position of sharing the risk instead of the risk being shouldered solely by the program or project manager. When you do share a risk with a stakeholder, you also need to make him or her aware of how bad a situation can be or how ugly it can get. Is one way right? It depends on your organizational culture and the nature of your stakeholders.

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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