Integrating Risk and Program Management

There was some discussion on New Grange awhile back about risk management and opportunity. I work in a high risk business domain (flying spacecraft to Low Earth Orbit and Mars). This domain is also risk adverse, since getting paid for a successful mission is critical to continued employment.

The discussion was around "is there opportunity" in risk management, as well as the usual discussion about what is risk management and why one person's risk is another's opportunity. Here are some Keys to Successful Risk and Opportunity Management extracted from a recent Space Risk Management Symposium:

• Sound risk and opportunity management cannot save a poorly planned program with bad processes
• Prevent the competition between risks and opportunities
• Prevent unhealthy competition between teams
• Risk and opportunity management provide diminishing returns if overused
• The costs of pursuing opportunities and managing risks must be weighed against the expected benefits
• An environment should be created to encourage risk and opportunity management
• Risks and opportunities are not just normal variations in plan
• Recognize the difference between risks and opportunities
• Opportunities are not "positive risks"

The last points on opportunity as not being positive risk and the "normal variation" concept are poorly understood by many. Risks that should be addressed in the task Integrated Master Plan (IMS) are not risks, they are activities for the program.

These concepts are from a specific domain (aerospace) and a specific business unit (launch vehicle propulsion).

Some references include:

1. Integrating Program Risk Management into the Integrated Product and Process Development (IPPD) Environment, Cvetko, Robert and Harry Jabagchourian, Proceedings of the Third National Symposium on Risk Management, 2000.
2. Risk and Opportunity Management, Forsgerg, Kevin and Harold Mooz, Center for Systems Management, INCOSE Symposium.
3. Effective Strategies for Exploiting Opportunities, Hillson, David, Proceedings of the Project Management Annual Seminar and Symposium.
4. Implementation of Opportunity & Risk Management in BAE Systems Astute Class Limited - a Case Study, Proceedings of the Fourth European Management Conference, PMI Europe, 2001