Is there value in taking risks? Project managers often try to avoid risks that could be detrimental to project success, but are there cases in which the rewards potentially outweigh the risks? This is the crux of risk intelligence and here’s what you should know about utilizing this strategy for your projects.
How It Varies from Risk Management
If you don’t know a lot about risk intelligence, it’s easy to confuse it with risk management. While the two are similar, however, there are differences. Generally speaking, risk management has to do with first identifying risks, then assessing them in order to find ways to control and minimize potential harm. This is considered a precursor for risk intelligence, which focuses more on using available information to differentiate between risks that must be avoided versus those that are necessary in order to gain some type of advantage.
The idea here is that some risks are necessary and beneficial. You’ve no doubt heard the phrase “no risk, no reward”. While risk management focuses on mitigating harm associated with risk factors, risk intelligence seeks to understand not only which risks can and should be avoided, but which ones have the potential to deliver rewards – in other words, calculated risks.
Risk intelligence can be applied to any number of business functions. Project risk intelligence, in particular, especially in enterprise, revolves around managing risks while also creating value. In some cases, a risk intelligent enterprise model is used within an organization to establish a framework for a risk program, which is applied to projects in keeping with a company’s overall strategies. In this way, standards are set for goals, activities, measurements and results, ensuring that all projects progress with uniform risk intelligence procedures in mind.
What Does This Mean from a Project Management Standpoint?
Suppose you’re starting a project and your client wants you to work with a specific technology. If you haven’t worked with it before, there’s a risk you might make mistakes. The solution to this might be avoiding such risks by insisting on using technology you’re familiar with. On the other hand, committing to using the new technology could create far greater value in the long run, not only making your current client happy, but allowing you to better serve all of your clients. In other words, this is a situation in which the potential rewards outweigh the risks.
When you assess risks, using available intelligence and insights to explore all angles, you gain the ability to see where calculated risks can actually pay off. This is the impetus behind project risk intelligence, as opposed to risk management, which tends to focus more on mitigating negative outcomes, regardless of potential rewards.
How Can Managers Include Project Risk Intelligence in Day-to-Day Operations?
Incorporating all of this into your daily activities as a project manager requires a two-pronged approach. First, you need to accept the benefits of risk intelligence and embrace the process of differentiating between “good” and “bad” risks, so to speak. From there you need to learn to utilize your Planview AdaptiveWork project management software to track potential risk factors, communicate effectively with a team and make adjustments that mitigate potential negative outcomes while pursuing possible rewards.