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

IQPC
Project Risk Management 2008
Brisbane, Australia

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

Torsten J. Koerting
www.TORSTENKOERTING.com

Defining the Critical Value
of 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.”

RISK
=
(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
becomes
MORE and more important ?

What has changed the
way we HAVE to
manage projects and
their risks ?

The World Inconvenient The World
is flat Truth is changing

The Fall of the Berlin Wall …

… 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 …

… enables writing software so
that it can be easily shared,
improved and given access to.

… is moving lower value functions
to other firms,
in other countries
for a lower cost.

… is moving the production of
goods into other countries.

… by partnering with
other companies to
receive goods
when needed.

… by sourcing whole
processes to other
companies

… by getting answers to
almost any question
within seconds

… by having all this
information
available at
your fingertips

The World 1. The Fall of the Berlin Wall
is flat 2. The Internet
3. Work-Flow Software
4. Open-Sourcing
5. Outsourcing
6. Off-Shoring
7. Supply-Chaining
8. In-Sourcing
9. In-Forming
10.Information Steroids

… 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 …

With Increased Competition …

… continuous learning
is required ...

… and well developed
personal skills.

The World The Impact :
is flat
1. Increased Complexity
More things can fail
More things to think about
More time zones
Different cultures
More people
More points of failures
2. Increased Competition
Continuous learning
Improve personal skills

… bigger storms than ever ...

… and one after the other ...

What can

YOU
do about it
?

OK … there is something
positive about it.

• Demand higher
than supply

• Supply controlled by
OPEC and former USSR

• Demand will increase

… and food is used as ethanol.

Inconvenient 1. Global Warming
Truth Sea Levels rising
Water shortage
More storms than ever
Lakes disappear
More wildfires
2. Shortage in Resources
Resource shortage
War for resources

… deal with
new requirements …

…

more
change
as
you
go

…

Inconvenient The Impact :
Truth
1. Sharpen the senses
2. Deal with new Requirements
3. More Change while you run
4. Higher Risk profile needs
higher contingency

… the risk
nobody had
on its register …

quot;Today, the store of human
knowledge doubles
every five years.quot;
- Bill Clinton, 2005

The World 1. Terrorism
is changing 2. Increase of Knowledge
3. Growth in Population
4. Flatter
5. Warmer

… try to know what you don’t know …

… identify the right contingency …

… and manage the risk and
not just the project.

The The Impact :
Impact
1. Look at risks
we don’t know yet
2. Identify Contingency
3. Manage Risks instead
of projects

Inconvenient 1. Global Warming
Truth Sea Levels rising
Water shortage
More storms than ever
Lakes disappear
More wildfires
2. Shortage in Resources
Running out of resources
The resource war
Political Requirements

Question

… and I do not have
an answer …

The ‘Answer’ is always …

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/
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/

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 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/

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/
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/

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