The Critical Value of Project Risk Management - Why do we have to manage Projects and Risks differently ?

IQPC

Project Risk Management 2008Brisbane, Australia

The Critical Value of

Project Risk ManagementProject Risk Management- Why do we have to manage Projects and Risks differently ? -

Torsten J. Koerting

www.TORSTENKOERTING.com

T H A N K

Y O UY O U

www.torstenkoerting.com

www.paragliding 365.com

Defining the Critical Value

of Project Risk Managementof Project Risk Management

Torsten J. Koerting

www.torstenkoerting.com

Risk (definition)

“Probability or threat of a damage, injury,

liability, loss, or other negative occurrence,

caused by external or internal vulnerabilities,

and which may be neutralized through

premeditated action.”

Risk (definition)

“The quantifiable likelihood of loss or

less-than-expected returns.”

Risk (definition)

“Risk is a concept that denotes a potential

negative impact to some characteristic of

value that may arise from a future event.”

R I S K

=

(probability of risk occurring) (probability of risk occurring)

x

(impact of risk occurring)

“Take calculated risks. That is quite

different from being rash.”

- George S. Patton (1885 – 1945)

“The policy of being too cautious is

the greatest risk of all.”

- Jawaharlal Nehru (1889 - 1964)

Why does Risk Management Why does Risk Management Why does Risk Management Why does Risk Management

becomesbecomesbecomesbecomes

MORE and more important ?MORE and more important ?MORE and more important ?MORE and more important ?

What has changed the What has changed the What has changed the What has changed the

way we HAVE to way we HAVE to way we HAVE to way we HAVE to

manage projects and manage projects and manage projects and manage projects and

their risks ?their risks ?their risks ?their risks ?

The World

is flat

Inconvenient

Truth

The World

is changing

The Fall of the Berlin Wall …

… ended the cold war …

… and granted

access to new markets for

products, labor and material.

The Internet …

… created easy global competition and

increased the ability to share information

The Microsoft Office Suite …

… and the

HTML and HTTP

protocols …

Open – Sourcing …

… enables writing software so

that it can be easily shared,

improved and given access to.

Outsourcing …

… is moving lower value functions

to other firms,

in other countries

for a lower cost.

Off shoring …

… is moving the production of

goods into other countries.

Supply Chaining …

… by partnering with

other companies to

receive goods

when needed.

In sourcing …

… by sourcing whole

processes to other

companies

Informing …

… by getting answers to

almost any question

within seconds

Information Steroids …

… by having all this

information

available at

your fingertips

The World

is flat

1. The Fall of the Berlin Wall

2. The Internet

3. Work-Flow Software

4. Open-Sourcing

5. Outsourcing5. Outsourcing

6. Off-Shoring

7. Supply-Chaining

8. In-Sourcing

9. In-Forming

10.Information Steroids

With Increased Complexity …

… there are more things

to think about …

… there are more time zones

to overcome …

… there are more people

to deal with …

… and with more people there are

more cultures do deal with …

… more things can ( will ) fail …

… and will take longer.

With Increased Competition …

… continuous learning

is required ...

… and well developed

personal skills.

The Impact :

1. Increased ComplexityMore things can fail

More things to think about

The World

is flat

More time zones

Different cultures

More people

More points of failures

2. Increased CompetitionContinuous learning

Improve personal skills

The World

is flat

Inconvenient

Truth

The World

is changing

Global Warming …

… increased temperature ...

Svalbard Global Seed Vault

… rising see levels ...

… water shortage ...

… bigger storms than ever ...

… and one after the other ...

… disappearing lakes ...

Before

1972

After

2001

… and more wildfires ever.

What can

Y O UY O Udo about it

?

OK … there is something

positive about it.

Shortage in resources …

• Demand higher

than supply

• Supply controlled by

OPEC and former USSROPEC and former USSR

• Demand will increase

… water is disappearing …

… and food is used as ethanol.

• Oil• Water• Food

Inconvenient

Truth

1. Global WarmingSea Levels rising

Water shortage

More storms than ever

Lakes disappear

More wildfires

2. Shortage in ResourcesResource shortage

War for resources

… sharpen our

senses …

… deal with

new requirements …

…

more

change

asas

you

go

…

The Impact :

1. Sharpen the senses

2. Deal with new Requirements

3. More Change while you run

Inconvenient

Truth

3. More Change while you run

4. Higher Risk profile needs

higher contingency

The World

is flat

Inconvenient

Truth

The World

is changing

… the risk

nobody had

on its register …

"Today, the store of human

knowledge doubles

every five years."

- Bill Clinton, 2005

… 9 billions shortly …

… on a flat and …

… and warmer world.

The World

is changing

1. Terrorism

2. Increase of Knowledge

3. Growth in Population

4. Flatter

5. Warmer5. Warmer

… try to know what you don’t know …

… identify the right contingency …

… and manage the risk and

not just the project.

The

Impact

The Impact :

1. Look at risks

we don’t know yet

2. Identify Contingency2. Identify Contingency

3. Manage Risks instead

of projects

The World

is flat

Inconvenient

Truth

The World

is changing

The World

is flat

1. The Fall of the Berlin Wall

2. The Internet

3. Work-Flow Software

4. Open-Sourcing

5. Outsourcing5. Outsourcing

6. Off-Shoring

7. Supply-Chaining

8. In-Sourcing

9. In-Forming

10.Information Steroids

Inconvenient

Truth

1. Global WarmingSea Levels rising

Water shortage

More storms than ever

Lakes disappear

More wildfires

2. Shortage in ResourcesRunning out of resources

The resource war

Political Requirements

The World

is changing

1. Terrorism

2. Increase of Knowledge

3. Growth in Population

4. Flatter

5. Warmer5. Warmer

Therefore

… L E A R N ...

… F I N D O U T…

… M A N A G E R I S K …

… and S T A R T T O D A Y !

T H A N K

Y O UY O U

Question

… and I do not have

an answer …

The ‘Answer’ is always …

T H A N K

Y O UY O U

Picture Credits ( 1 / 3 )

inconvenient truth - http://www.flickr.com/photos/galerieopweg/

inconvenient truth v002 - http://www.flickr.com/photos/yoshigi/

The world is flat - http://www.flickr.com/photos/obriendigital/

The world is changing - number of books - http://www.flickr.com/photos/babblingdweeb/

The world is changing - number of books - v002 - http://www.flickr.com/photos/flyzipper/

1430 enciclopedia - http://www.flickr.com/photos/evaekeblad/

balancing lady - http://www.flickr.com/photos/orangebrompton/

important - http://www.flickr.com/photos/valeriebb/

billboard - http://www.flickr.com/photos/mjlaflaca/

Obama change - http://www.flickr.com/photos/tsevis/

Fall of Berlin Wall - http://www.flickr.com/photos/gavinandrewstewart/Fall of Berlin Wall - http://www.flickr.com/photos/gavinandrewstewart/

Microsoft Office Candy - http://www.flickr.com/photos/sunfox/

HTML - http://www.flickr.com/photos/kk/

Latop Beach - http://www.flickr.com/photos/zzathras777/

Open Sourcing - http://www.flickr.com/photos/martinbekkelund/

Big Crowd - http://www.flickr.com/photos/richevenhouse/

cold war one - http://www.flickr.com/photos/pingnews/

New Markets - http://www.flickr.com/photos/pnp/

Outsourcing 1 - http://www.flickr.com/photos/danzden/

Outsourcing 3 - http://www.flickr.com/photos/kafkan/

Offshoring 1 - http://www.flickr.com/photos/photohome_uk/

Offshoring 2 - http://www.flickr.com/photos/trotzenberg/

Offshoring 1b - http://www.flickr.com/photos/taylar/

Supply Chaining 1 - http://www.flickr.com/photos/nimrodbar/

Supply Chaining 2 - http://www.flickr.com/photos/drewesque/

Insourcing 1 - http://www.flickr.com/photos/zyphbear/

Insourcing 2 - http://www.flickr.com/photos/liveu4/

Picture Credits ( 1 / 3 )

Informing 1 - http://www.flickr.com/photos/ask-for-peace/

Informing 2 - http://www.flickr.com/photos/julianbleecker/

Infroming 3 - http://www.flickr.com/photos/gedankenstuecke/

Info Steroids 1 - http://www.flickr.com/photos/listelys/

Info Steroids 2 - http://www.flickr.com/photos/chanc/

Project Manager - http://www.flickr.com/photos/floongle/

conference 1 - http://www.flickr.com/photos/mrtopf/

California Bush fires - http://earthobservatory.nasa.gov/NaturalHazards/Archive/Oct2003/California.TMOA2003299_lrg.jpg

storm 1 - http://www.flickr.com/photos/gisuser/

storm 2 - http://www.flickr.com/photos/lakerae/

lake 1 - http://www.flickr.com/photos/mashroms/lake 1 - http://www.flickr.com/photos/mashroms/

lake chad 1 - nasa.gov

lake chad 2 - nasa.gov

seed vault 1 - http://www.flickr.com/photos/bzzzt/

rising see levels - http://www.globalwarmingart.com/wiki/Image:Recent_Sea_Level_Rise_png - Robert A. Rohde

sea levels 2 - http://www.flickr.com/photos/2kool/

water shortage - http://www.flickr.com/photos/mckaysavage/

time zone - http://www.flickr.com/photos/mickyates/

more people 1 - http://www.flickr.com/photos/inyucho/

more people 3 - http://www.flickr.com/photos/msjacoby/

cultures - http://www.flickr.com/photos/untitlism/

longer - http://www.flickr.com/photos/swamibu/

break 1 - http://www.flickr.com/photos/jnsabino/

more things 1 - http://www.flickr.com/photos/brixton/

global warming 1 - http://www.flickr.com/photos/hodac/

global warming 2 - http://www.flickr.com/photos/focalplane/

global warming 3 - http://www.flickr.com/photos/a_siegel/

Picture Credits ( 1 / 3 )

oil supply 1 - http://www.flickr.com/photos/falsecognate/

oil supply 2 - http://seekingalpha.com/wp-content/seekingalpha/images/

oil supply 3 - http://www.wisergroup.net/img/oil-graph.jpg

water shortage 1 - http://www.flickr.com/photos/sunrise7/

water shortage 2 - http://www.flickr.com/photos/pierre_pouliquin/

regulations 1 - http://www.flickr.com/photos/two-wrongs/

terrorism 1 - http://www.flickr.com/photos/sis/

knowledge 1 - http://www.flickr.com/photos/worldeconomicforum/

flat world 1 - http://www.flickr.com/photos/aidg/

warmer world 1 - http://www.flickr.com/photos/adrianol/

42 - http://www.flickr.com/photos/howzey/42 - http://www.flickr.com/photos/howzey/

dont panic - http://www.flickr.com/photos/fboosman/

question - http://www.flickr.com/photos/eleaf/

learning - http://www.flickr.com/photos/yewenyi/

competencies 1 - http://www.flickr.com/photos/38234414@N00/

lifeguard 1 - http://www.flickr.com/photos/john/

requirements 1 - http://www.flickr.com/photos/davidquick/

change requests 1 - http://www.flickr.com/photos/yyq123/

contingency 1 - http://www.flickr.com/photos/grantmac/

open door 1 - http://www.flickr.com/photos/eyeballstew/

umbrellas 2 - http://www.flickr.com/photos/greentea/

wet woman 1 - http://www.flickr.com/photos/maxedaperture/

ethanol 1 - http://www.flickr.com/photos/jonathanvlarocca/

ethanol 2 - http://www.flickr.com/photos/swanksalot/

ethanol 3 - http://www.flickr.com/photos/whatknot/