Episode 148.3: Risk Management - Critical Success Factor for your Project - Part 3
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Part 3. This episode of The PM Podcast is a 4-part webinar presented by Andreas Heilwagen on the topic of Risk Management. He stipulates that it is a critical success factor for your project success. We look at a definition of Risk Management, present the value that it offers to your projects, go through the processes offered by The PMBOK Guide, take a look at the free risk management templates offered by Andreas and the look into the success factors that will make your internal risk management approach a winning activity.
Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: Hello and welcome to episode #148. I am Cornelius Fichtner. This is The Project Management Podcast™, nice to have you with us.
In this episode, you will see part 3 and part 4 of Andreas Heilwagen’s presentation on risk management. First, we will go through to the Risk Management Templates that Andreas provides for free. That’s in part 3. And then in part 4, we take a look at the Seven Success Factors.
Cornelius Fichtner: Andreas, at the beginning of the presentation, you mentioned that you were going to give us a few templates that we could use tomorrow on our projects and we have now reached this particular section. And if I see this right, there are I think three templates that we are going to look at, right?
Andreas Heilwagen: Right! As we discussed before, there is template number zero, the template that doesn’t exist because if you want to write that meta risk management plan, I cannot give you contents. You have to write it down yourself. You know which topics to cover.
Cornelius Fichtner: Right.
Andreas Heilwagen: But if you want to write down the risk themselves, you use a risk register. And that’s very easy. It’s a white template and I will show it to you step by step.
Cornelius Fichtner: Okay. One more question here. These templates, they are on www.pm-templates.de so this is a German website but the screenshot that we look at here, “Risk Register: Strategy” is in English so the templates are in English?
Andreas Heilwagen: No, they are both in German and English.
Cornelius Fichtner: Ah! They’re both in German and English, yes.
Andreas Heilwagen: And I need to update them because it’s not chance but it’s opportunity.
Cornelius Fichtner: Yes, exactly. I can see that there are Risks/Chance, should be Risk/Opportunity. So they’re both in English and in German, okay.
Andreas Heilwagen: Sorry, I’m not a native speaker. I will update it.
Cornelius Fichtner: That’s okay.
Andreas Heilwagen: When you’re here in this podcast…
Cornelius Fichtner: People will forgive you.
Andreas Heilwagen: Yeah!
Cornelius Fichtner: I promise you.
Andreas Heilwagen: Column #1, “Priority”. This is my suggestive colloquial. If you see risk with the red symbol, it means you have to act immediately. It’s a very bad situation.
On the other hand like here if it’s an opportunity, we have also the need to act immediately to use it. Yellow means: Okay, you will act in the defined timeframe. And green means: Okay, we know the risk but we don’t need to act immediately. And the entries in this example just show several combinations of data to exploit opportunities or the options of this sheet. The column you just…
Cornelius Fichtner: You just start filling in from left to right, correct?
Andreas Heilwagen: Yes! When you do one process after the other, the template will fill from the left to the right.
Cornelius Fichtner: Okay.
Andreas Heilwagen: And this case, I just disabled some columns and choose others to focus on certain areas of the sheet.
So as we discussed previously, it’s very important to show management because of risks and the benefit of opportunities and this column still called “Risk/Chance value”. The red values are bad. These are risks. So it caused you €100 or €21,000. Out of it if you configure out you are excellent suitably and if you have an opportunity, it’s a negative value just to keep the logic consistent.
Cornelius Fichtner: Right.
Andreas Heilwagen: Then we talked about strategies. We talked about acceptance. The strategies are called different for opportunities so they are something like exploit or enhance.
And then the status which is my customer favorite, I wanted to know what I have to do with the risk when I have a quick look and very important is the impact. We have to describe what happens if the risk occurs or if you have the opportunity and you have to describe it in a way which management understands.
Let’s move on to the next slide. I kept the first three columns and now we have a new group of columns which is called “Assessment before”. So we have a percentage which says the probability of this risk or opportunity to occur is for example, 20% or 60% and it’s a pull-down menu on top so that you cannot enter for example 65.3% possibilities; 10%, 20%, 40%, 60%. Choose it if you like because we will have some categorization later.
Impact, I have it in two ways. I have an impact called small, high; it’s just your personal opinion or group opinion on the impact and we have the real cost. Cost of €500 can be a small impact. For example for a very large department. Depending on the department size, the interpretation of the values can be quite different.
Cornelius Fichtner: You mentioned earlier, what was the name, Robert Courtney Jr. from IBM, is this kind of the calculation that he suggested there?
Andreas Heilwagen: Yes.
Cornelius Fichtner: Yeah, that’s just the impact times probability times the actual cost and then you go from the first example here from €100 up to a €500 of possible damage that this risk might cause to the project.
Andreas Heilwagen: So if the risk occurs and it caused €500, the a probability of this risk occurring is 20%, the risk value is €100. It’s a simple multiplication.
Cornelius Fichtner: Yes.
Andreas Heilwagen: And all these formulas are explained in blog posting. The blog posting is in German. I think I will provide an English translation.
Cornelius Fichtner: There’s always Google Translate.
Andreas Heilwagen: Oh! That’s great.
Cornelius Fichtner: That’s going to be interesting. There’s a risk for you: Translating the risk explanation through Google Translate.
Andreas Heilwagen: I will provide an English translation of that blog posting.
Cornelius Fichtner: Alright. We want to move on to the risk responses in the risk register?