Tuesday, February 14, 2012

Risk and opportunity link innovation

This observation from one of my risk management students
I have found that many times that the occurence of a given risk results in the opportunity to solve a problem in a new way. We have developed a number of innovative solutions as a result of one risk occuring that required an innovative solution to mitigate the risk
Craig Ballenger

This is part of the ageless discussion about whether risk and opportunity are two sides of the same coin. Many academics say yes; most practitioners say no. Thus, practitioners have not accepted the leadership of the academics on this topic.

The PMBOK, to cite one reference, puts them together in one chapter. But they are handled completely differently from the perspective of management actions:

PMBOK risk responses:
Accept, transfer, mitigate, and avoid

PMBOK opportunity responses,on the other hand:

Exploit, share, enhance, accept

And, it's not just the PMBOK. Most projects put risk management in it's own stepped process: plan, identify, assess, respond, and then iterate based on results. Most projects put opportunity through some kind of change management and budget prioritization process, often requiring program or portfolio coordination.

Thus, two management paradigms and thus two attitudes about risk vs opportunity.

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