Sunday, July 31, 2016

Risk management: we don't make policy

From General Mike Hayden's memoir (paraphrasing from pg 428)
Imagine two doors to the same room: One labeled risk manager; the other labeled visionary.
Though the risk manager's door, entry is for the inductive thinker:
  • I've got the facts; now I need to connect the dots to reveal a generality or integrating narrative
Through the visionary's door, entry is for the deductive thinker:
  • I've got the vision; I'm confident the facts and dots needed for implementation will emerge
And, consider this:
  • Pessimists with facts enter through the risk manager's door
  • Optimists with business-as-we-want-it enter through the visionary's door
Then what happens?
Each needs to find the other. In the best of situations, they meet in the middle of the room where there is buffer space and flexibility.

Risk management does not establish the vision, set any policy, or necessarily decide anything; it only sets the left and right hand boundaries which arise from the generalities devined from the observable facts. The space in between the boundaries is where the visionary gets to do their envisioning, and decision maker's get to do the deciding.

Sound familiar? I hope so. You'll find a similar explanation known as the "project balance sheet" in my book in Chapter 6 of "Maximizing Project Value: A project manager's guide". In that metaphor, the right side is for the fact-based inductive manager; the left side is for the deductive visionary. And, since those two never agree fully, there is a gap between the inductive and deductive.

And the gap is where the risk is. And who is the risk manager? The PM and the project team -- not the visionary (after all, they have no facts; facts are behind the other door!)

And, that's why we pay the PMO the big bucks: to manage the risk!

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