Positioning project, programme Positioning project, programme and portfolio risk and portfolio risk

Risk EssentialsRisk Essentials18th February 201518th February 2015

Dr David Hancock MBADr David Hancock MBAHead of ConstructionHead of Construction

AgendaAgenda

What is this thing called Risk Management?What is this thing called Risk Management?

What about upside Risk?What about upside Risk?

Some problem areas for traditional risk Some problem areas for traditional risk management applicationsmanagement applications

How does management approach these How does management approach these problems?problems?

Risk Management in ContextRisk Management in Context Corporate failures:Corporate failures:

Salomon Brothers 1991,Orange county 1994, Barings Bank 1995 Salomon Brothers 1991,Orange county 1994, Barings Bank 1995 (Leeson £827m) Sumitomo Bank 1995, Enron 2001, Parmalat 2003, (Leeson £827m) Sumitomo Bank 1995, Enron 2001, Parmalat 2003, Freddie Mac 2008, Lehman Brothers 2008, Société Générale 2008 Freddie Mac 2008, Lehman Brothers 2008, Société Générale 2008 (Kerviel £4.1Bn), Morgan Stanley 2008 (Hubler £5.8Bn), UBS 2011, JP (Kerviel £4.1Bn), Morgan Stanley 2008 (Hubler £5.8Bn), UBS 2011, JP Morgan 2012 (Morgan 2012 (‘the whale’), ‘the whale’),

Corporate Governance as a concept is born:Corporate Governance as a concept is born:(Cadbury 1992, Greenbury 1995, Hampel 1998, Turnbull 1999 revised (Cadbury 1992, Greenbury 1995, Hampel 1998, Turnbull 1999 revised 2005, Sarbanes-Oxley Act 2002, Combined code 2003, UK Corporate 2005, Sarbanes-Oxley Act 2002, Combined code 2003, UK Corporate Governance code 2010 revised 2012)Governance code 2010 revised 2012)

Principles of Corporate GovernancePrinciples of Corporate Governance OpennessOpenness IntegrityIntegrity AccountabilityAccountability

Concept of Enterprise Risk Management (ERM)Concept of Enterprise Risk Management (ERM)COSO 2004, AS/NZS 4360:2004, BS 31100:2008, ISO 31000:2009COSO 2004, AS/NZS 4360:2004, BS 31100:2008, ISO 31000:2009

What are Enterprise Risk Management What are Enterprise Risk Management (ERM) and Corporate Governance ? (ERM) and Corporate Governance ?

• The underlying premise of The underlying premise of ERMERM is that every entity exists to is that every entity exists to provide value for its stakeholders. It enables management to provide value for its stakeholders. It enables management to effectively deal with uncertainty and associated risk and effectively deal with uncertainty and associated risk and opportunity enhancing the capacity to build value. It is applied opportunity enhancing the capacity to build value. It is applied across the enterprise at every level and unit and includes taking across the enterprise at every level and unit and includes taking an entity level portfolio (holistic) view of risk.an entity level portfolio (holistic) view of risk.

• Corporate Governance Corporate Governance is the system by which is the system by which organisationsorganisations are are directed and controlled.directed and controlled.

• Corporate governance encompasses strategic management, Corporate governance encompasses strategic management, performance, regulatory framework, disclosure, transparency and performance, regulatory framework, disclosure, transparency and business ethics – at its heart lies accountability to stakeholders business ethics – at its heart lies accountability to stakeholders and the protection of their rights and interests.and the protection of their rights and interests.

Three Lines of DefenceThree Lines of Defence

What is meant by a Risk?What is meant by a Risk?

Effect of Uncertainty on Objectives. - Both positive and negative

ISO 31000:2009 and BS 31100:2008

The uncertainty of outcome, whether positive or negative threat, of actions and events. It is the combination of likelihood

and impact, including perceived importance.(UK HM Treasury 2004)

A statistical inevitability?

Evaluating A RiskEvaluating A Risk

LikelihoodLikelihood

The chance that the risk may actually be realised, The chance that the risk may actually be realised, (occur), sometimes called probability(occur), sometimes called probability

ImpactImpact

The effect that the risk being realised would have The effect that the risk being realised would have on the Objectives, sometimes called consequenceon the Objectives, sometimes called consequence

LIK

5

ELI

4

HOO

3

D

2

1

1 2 3 4 5SEVERITY

Legal Impact

1 Improvement notice 2 Prohibition notice.

3 Prosecution with fine.

4 Directors charged with Corporate killing, fraud etc..

5 Directors charged with Corporate killing, fraud etc..

Reputation Impact

1 No press coverage 2 Minor, local reputation damage. 3 Major, local reputation damage. 4 National adverse media coverage.

5 International adverse media coverage

Financial

1 £ thousands

2 £ tens of

3 £ hundreds of

4 £ Millions

5 £ tens of millions

thousands

thousands

Descriptor

1 Improbable

2 Unlikely

3 Less likely than not

4 Likely

5 Probable

Likelihood

Descriptor

1 Minor

2 Moderate

3 Significant

4 Substantial

5 Catastrophic

Impact

Output Targets

1 Exactly meets targets 2 Significantly meets targets 3 Meets 50% of targets 4 partially meets targets 5 Does not meet targets

Health & Safety

1 Negligible injuries 2 Minor injuries 3 Major injuries 4 Single fatality

5 Multiple fatalities

Schedule

1 Day

2 Week

3 Month

4 Year

5 Years

Scoring and Traffic Light Scoring and Traffic Light NotationNotation

What is Risk? (Part 2)What is Risk? (Part 2)

Exists in the futureExists in the future There are many possible futures availableThere are many possible futures available The model is not realityThe model is not reality ““Recognising the possibility of different Recognising the possibility of different

outcomes and trying to make sure that activities outcomes and trying to make sure that activities are directed towards making an acceptable set are directed towards making an acceptable set of outcomes more likely”of outcomes more likely”

Risk management as a science really exploded Risk management as a science really exploded during the 20th century. However it still tended to during the 20th century. However it still tended to be dominated by the worlds of mathematics and be dominated by the worlds of mathematics and engineering. In 1921 Frank Knight in engineering. In 1921 Frank Knight in ‘Risk, ‘Risk, Uncertainty and Profit’ distinguished between Uncertainty and Profit’ distinguished between three different types of probability, which he three different types of probability, which he termed:termed:- - deductivedeductive probability, probability, - statistical probability and - statistical probability and - estimates.- estimates.

History of RiskHistory of Risk

Deductive probabilityDeductive probability- odds of rolling any number on a die. Here the - odds of rolling any number on a die. Here the probability of occurrence is known specifically.probability of occurrence is known specifically.

Statistical probabilityStatistical probability- probability with relative frequency over a long series - probability with relative frequency over a long series of events or the proportion of an event in a large of events or the proportion of an event in a large population. population.

EstimatesEstimates- when there is no valid basis of any kind for classifying - when there is no valid basis of any kind for classifying instances, only estimates can be made.instances, only estimates can be made.

In this final case the use of any kind of In this final case the use of any kind of statistical statistical analysis would be meaningless. analysis would be meaningless.

History of RiskHistory of Risk

Risk AssessmentRisk AssessmentQuantitativeQuantitative

An An attemptattempt to apply to apply meaningfulmeaningful and objective and objective probabilities and subsequently consider and then probabilities and subsequently consider and then quantify the potential of such risks in terms of quantify the potential of such risks in terms of time, cost and quality (Laxtons guide to risk time, cost and quality (Laxtons guide to risk analysis and management)analysis and management)

QualitativeQualitative Involves the registration of the identified risks, by Involves the registration of the identified risks, by

‘experts’ in a formal manner using ‘experts’ in a formal manner using subjectivesubjective probabilities.probabilities.

Selection of stakeholders is critical to its success.Selection of stakeholders is critical to its success.Need to take into consideration Group Dynamics.Need to take into consideration Group Dynamics.Also used to identify OpportunitiesAlso used to identify Opportunities

Understanding what is meant by Understanding what is meant by success is crucial to RMsuccess is crucial to RM

The Risk ProcessThe Risk Process

SetObjectives

Monitorthe risks

Reportmovement

of therisk

Identify Threatsand Opportunities

to Objectives

Assess the risks associatedwith each threat and

opportunity (Inherent) and map exposure (PxC)

Consider actionsto manage risk

terminate, tolerate, treat, transfer

Reassess the risk (Residual) and remap (PxC) in light of actions

in place

Response to Response to riskrisk… the 4 Ts… the 4 Ts

Terminate – Do things differently and thus remove the risk

Tolerate – Nothing can be done at a reasonable cost to mitigate the risk or the likelihood and impact are at a reasonable level

Treat – Take action to control the risk either by reducing the likelihood of the risk developing or limiting the impact it will have on the project

Transfer – Some of the financial risk may be transferable via insurance or contractual arrangements or accepted by third parties

Value Protect ion Value Creation

Risk Management as Value CreationRisk Management as Value Creation

Response to Response to OpportunitiesOpportunities

Exploit – Exploiting a positive risk is about ensuring everything is in place to increase the probability of the occurrence of the opportunity

Enhance – Enhancing an opportunity involves identifying the root cause of a positive risk so that you can influence the root cause to increase the likelihood of the opportunity

Accept – At times, opportunities simply fall on your lap and you choose to accept them. This is called accepting a positive risk

Share – Sometimes exploiting a positive risk is not possible without collaboration. Sharing a positive risk is when you collaborate with another department or organisation to exploit an opportunity.

Improving risk management (maturity)Improving risk management (maturity)C

ert

aint

y

Cost / Time

Target NDistribution of project outcomes

Level 1 – Awareness (Heroes deliver)

Ce

rtai

nty

Cost / Time

Target N + a

Level 2 – Repeatability (Disciplined process)

Level 3 – Defined (Standard, consistent process)

Cer

tain

ty

Cost / Time

Target N - xC

erta

inty

Cost / Time

Target N - y

Level 4 – Managed (Predictable process)

Cer

tain

ty

Cost / Time

Target N - z

Level 5 – Optimised (Continuously Improving process)

Risk Management MaturityRisk Management Maturity

Maturity ModelMaturity Model

Arcadia by Tom StoppardArcadia by Tom Stoppard

Problem Areas for present Risk Problem Areas for present Risk practicespractices

WickedWickedMessy

Tame

• Tame ProblemsTame Problems

Systems ComplexitySystems Complexity• Messes (Ackoff 1970) Messes (Ackoff 1970)

Behavioural ComplexityBehavioural Complexity• Wicked Problems (Rittel & Weber 1973)Wicked Problems (Rittel & Weber 1973)• Wicked Messes (Roth & Senge 1996)Wicked Messes (Roth & Senge 1996)

Problem areas for present risk Problem areas for present risk practicespractices

Problem SolvingProblem Solving

Problem

Solution

Time since beginning

Gather Data

Analyse Data

Formulate Solution

Implement Solution

“TAME” Problems can be solved by linear or “waterfall” process

Systems ComplexitySystems Complexity

Clusters of interrelated or interdependent Clusters of interrelated or interdependent problemsproblems

Messes (Ackoff 1970)Messes (Ackoff 1970)

““MESSES”MESSES” meet the following criteria:

Organisational Complexity - clusters of interrelated or interdependent problems, or systems of problems.

Messes are puzzles; rather than solving them we resolve their complexities.

Cannot be solved in relative isolation from one another.

Behavioural ComplexityBehavioural Complexity

Conflicting social ethics and beliefsConflicting social ethics and beliefs

‘‘Wickedness’ Wickedness’ (Rittel & Webber 1973)(Rittel & Webber 1973)

““WICKED PROBLEMSWICKED PROBLEMS”” are characterised by:

An evolving set of interlocking issues and constraints - no definitive statement of the problem (no understanding of the problem until the solution has been developed).

Many stakeholders - the problem solving process is fundamentally social (getting the right answer is not as important as having stakeholders accept the solution).

The constraints (resources, politics) change with time - stakeholders come and go, change their minds or change the rules.

Since there is no definitive Problem there is no definitive Solution.

Problem

Solution

Time since beginning

“WICKED” Problems cannot be solved by linear or “waterfall” process

Wicked Problem SolvingWicked Problem Solving

Resolving ““WICKED MESSESWICKED MESSES”” is “SATISFICING” (H. Simon 1956)

•Because of the number of stakeholders, changing constraints and dynamics of the problem, there is no ideal solution-it is “as good as it gets” or “good enough”

•The Problem solving process ends when resource (time, money energy etc.) runs out!

•Therefore we need a different approach when handling risk with respect to problems which are not Tame

Boston MatrixBoston Matrix

Behavioural Complexity

High

Low

Wicked Wicked Mess

(Complex Adaptive Systems)

Tame Mess

Resolution is social/ polit ical/ ethical/ moral/ behavioural

Solution is Scientif ic

Dynamic Systems Complexity

HighLow

What constitutes the What constitutes the ‘norm’ changes ‘norm’ changes over timeover time

Now OutNow Out Now InNow In

Experts v RealityExperts v RealityHow experts see itHow experts see itHow it really isHow it really is

Models v RealityModels v Reality

Irrational WorldIrrational World

Comparison of Tame and Wicked ProblemsComparison of Tame and Wicked Problems

Tame ProblemsTame Problems Relatively easy to define and can be Relatively easy to define and can be

treated as separate from other problems treated as separate from other problems and the environmentand the environment

Information needed to solve or make Information needed to solve or make sense of the problem is readily available, sense of the problem is readily available, well structured, and easy to put into usewell structured, and easy to put into use

There is a consensus not only among There is a consensus not only among problem solvers over what is the best problem solvers over what is the best method but also those with the problem method but also those with the problem accept and agree with the legitimate accept and agree with the legitimate problem solversproblem solvers

This class of problems has precedents This class of problems has precedents from which one can learn or take advice from which one can learn or take advice from others in order to become a from others in order to become a ‘‘bona ‘‘bona fide’’ problem solverfide’’ problem solver

Stakeholders to the problem defer to the Stakeholders to the problem defer to the expertise of the problem solver and seek expertise of the problem solver and seek little or no say in the process beyond that little or no say in the process beyond that requested requested

Wicked ProblemsWicked Problems Relatively difficult to define and cannot be Relatively difficult to define and cannot be

easily separated from other problems and easily separated from other problems and the environmentthe environment

Information needed to solve or make Information needed to solve or make sense of the problem is ill-structured, sense of the problem is ill-structured, changing and difficult to put into usechanging and difficult to put into use

There is neither a consensus among There is neither a consensus among problem solvers over what is the best problem solvers over what is the best method or a clear agreement over who is method or a clear agreement over who is and is not a legitimate problem solverand is not a legitimate problem solver

These problems are unique and These problems are unique and changeable; therefore attempts to solve changeable; therefore attempts to solve them make learning difficult and them make learning difficult and progression toward a solution is erraticprogression toward a solution is erratic

Stakeholders to the problem join the Stakeholders to the problem join the problem solvers in possessing conflicting problem solvers in possessing conflicting views of the problem, its solution, and the views of the problem, its solution, and the degree of involvement of the problem degree of involvement of the problem stakeholdersstakeholders

ProjectsProjects are stand alone, unique, transient are stand alone, unique, transient undertakings and are measured against the project undertakings and are measured against the project management plan in terms of the time, cost management plan in terms of the time, cost quality/performance triangle. quality/performance triangle.

ProgrammesProgrammes are interrelated or interdependent are interrelated or interdependent projects contributing to a common strategic projects contributing to a common strategic objective defined in the business plan. objective defined in the business plan.

PortfolioPortfolio is the total of all projects and programmes is the total of all projects and programmes and includes business as usual activities. and includes business as usual activities.

Projects, Programmes & Projects, Programmes & PortfoliosPortfolios

Projects (Tame) and Projects (Tame) and Programmes (Messes) Programmes (Messes)

Project ManagerProject Manager On Time On Time On BudgetOn Budget On QualityOn Quality

Programme ManagerProgramme Manager Balancing the projects in the programmeBalancing the projects in the programme Managing resources across boundariesManaging resources across boundaries Bring collectively to completionBring collectively to completion Trading between projects for optimisationTrading between projects for optimisation

Portfolios (Wickedness)Portfolios (Wickedness)Portfol io ManagerPortfol io Manager

Align and monitor projects to company Align and monitor projects to company strategystrategy

De-scope or stop projects no longer De-scope or stop projects no longer alignedaligned

Manage permanent and temporary Manage permanent and temporary resourcesresources

Liaise with and satisfy stakeholderLiaise with and satisfy stakeholder’s ’s requirementsrequirements

Pre-empt future requirementsPre-empt future requirements Horizon scanning and scenario planningHorizon scanning and scenario planning

Boston MatrixBoston Matrix

Ambiguity

High

Low

Wicked Wicked Mess

Tame Mess

Resolution is social/ political/ ethical/ moral/ behavioural

Solution is Scientific

UncertaintyHighLow

Projects Programmes

Portfolios ? Politics Societal ?

Effect of uncertaintyuncertainty on Objectives. - Both positive and negative ISO 31000:2009 and BS 31100:2008ISO 31000:2009 and BS 31100:2008

The uncertaintyuncertainty of outcome, whether positive or negative threat, of actions and events. It is the combination of likelihood and impact, including perceived importance.

UK HM Treasury, The Orange Book, 2004UK HM Treasury, The Orange Book, 2004

RISKRISK

Development of T5 as a Wicked MessDevelopment of T5 as a Wicked Mess

Leadership v Management Leadership v Management (J. Kotter 1990)(J. Kotter 1990)

Management Management Planning and BudgetingPlanning and Budgeting Organising and StaffingOrganising and Staffing Controlling and Problem Controlling and Problem

SolvingSolving

LeadershipLeadership Establishing a direction and Establishing a direction and

developing a vision of the developing a vision of the futurefuture

Aligning people (Stakeholders)Aligning people (Stakeholders) Motivating and inspiringMotivating and inspiring

“Leadership and management are two distinctive and complementary systems of action…… Both are necessary for success in an increasingly complex and volatile

business environment.”

Produces a degree of predictability and order and manages uncertainty Produces radical change and

manages ambiguity

Bump, bump, bumpBump, bump, bump

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.”

Control FallaciesControl Fallacies

1. More Rules = Tighter 1. More Rules = Tighter ControlControl

2. Targets Improve 2. Targets Improve BehaviourBehaviour

3. A thorough plan or risk 3. A thorough plan or risk register will keep us saferegister will keep us safe

4. All our risks are under 4. All our risks are under controlcontrol

Corruptiss ima republica plurimae leges ,

the more rotten the state , the more laws there are .

Tacitus

When a measure becomes a target , it ceases to be a good measure.

Goodhart

No battle plan ever survives f irst contact with the enemy.

Moltke

Life is what happens to you while you’re busy making

other plans. Lennon

“Many r isk officers thought their job was to f ind a way around regulat ion

as opposed to implementing.”

“Many risk officers thought their job was to f ind a way around regulat ion

as opposed to implementing.”

“Banks’ biggest problem was our belief in r isk assessment systems. …this comforting myth that you can just s t ick a ‘r isk probe’ into any project , l ike checking a turkey in

the oven.”

“Banks’ biggest problem was our belief in risk assessment systems. …this comforting myth that you can just s t ick a ‘r isk probe’ into any project , l ike checking a turkey in

the oven.” “Principle-based regulation is al l very well but there are parts of the market

which aren’t very principled!”

“Principle-based regulat ion is al l very well but there are parts of the market

which aren’t very principled!”

“After a while people just get condit ioned, i t ’s l ike ignoring the f ire alarm when it goes off. So you think: ‘Everyone else is

doing this so it must be all r ight. This is obviously normal behaviour… everyone else is in this product, so we’ve got to

be. And anyway I’ l l miss out on my bonus i f I don’t.”

“After a while people just get condit ioned, i t ’s l ike ignoring the f ire alarm when it goes off . So you think: ‘Everyone else is

doing this so it must be all r ight. This is obviously normal behaviour… everyone else is in this product, so we’ve got to

be. And anyway I’ l l miss out on my bonus if I don’t .”

Dr Miles Research Kings College London 2011

Management ResponseManagement Response

TameTame Collect sufficient data to Collect sufficient data to

identify trends and identify trends and indicators indicators

Pick the best response & Pick the best response & ImplementImplement

Command & Control Command & Control

MessyMessy Collect sufficient data to Collect sufficient data to

identify trends and indicators identify trends and indicators Deliberate on information Deliberate on information

collected use expertise to collected use expertise to chose appropriate responsechose appropriate response

Motivating and inspiringMotivating and inspiring

Produces a degree of predictability and order able to manage uncertainty by application of

process and command & control in a corporate centralised function

Management ResponseManagement ResponseWickedWicked

Design small scale actions to Design small scale actions to see how they respond in realitysee how they respond in reality

Identify patterns and select Identify patterns and select what feels the right thing to dowhat feels the right thing to do

Carry out actions that enhance Carry out actions that enhance good outcomes and reduce good outcomes and reduce poor outcomespoor outcomes

Wicked MessesWicked Messes Design small scale actions to Design small scale actions to

see how they respond in realitysee how they respond in reality Identify patterns but understand Identify patterns but understand

they may not be scalablethey may not be scalable Carry out actions that enhance Carry out actions that enhance

good outcomes and reduce good outcomes and reduce poor outcomes monitor closely poor outcomes monitor closely for unintended consequencesfor unintended consequences

Manages chaos and ambiguity based on experience lessons learnt from similar situations both good and bad. Failure is an option for positive learning

Control must be decentralised and senior leaders given autonomy over outcomes

Training and development which produces: practitioners who can follow detailed procedures and techniques, prescribed by risk management methods and tools.

From: Practit ioners as Trained Technicians

Learning and development which facilitates: development of reflective practitioners who operate and adapt effectively in complex environments, through experience, intuition pragmatic application of theory in practice.

Towards: Practit ioners as Reflective Practit ioners

From: Risk Management as Instrumental ProcessesThe instrumental lifecycle image of risk management as a linear sequence of tasks to be performed on an objective entity ‘out there’, using codified knowledge, procedures and techniques, and based on an image of projects as temporary apolitical production processes.

Concepts and images which focus interaction among people, illuminating: the flux and human action, and the framing of the risk profession) within an array of social agenda, stakeholder relations, politics and power.

Towards: Risk Management as Social Processes

Way ForwardWay Forward

Keep it SimpleKeep it Simple

Observation is vital (regular reporting)Observation is vital (regular reporting) Correct application of Correct application of ‘‘relevantrelevant’ data’ data Get the basics rightGet the basics right

APM GroupAPM Group’s 10 reasons for ’s 10 reasons for failurefailure

1. Lack of Planning1. Lack of Planning

2. Poor user input2. Poor user input

3. Lack of senior management support3. Lack of senior management support

4. Poor definition of scope4. Poor definition of scope

5. Unrealistic timescales5. Unrealistic timescales

6. Lack of (or inadequate) resources6. Lack of (or inadequate) resources

7. Incomplete or changing requirements7. Incomplete or changing requirements

8. Lack of project leadership and communication skills8. Lack of project leadership and communication skills

9. Lack of project competence9. Lack of project competence

10. Poor stakeholder management10. Poor stakeholder management

NAO/OGCNAO/OGC’s reasons for failure’s reasons for failure1. No clear link between the project and the organisation1. No clear link between the project and the organisation’s key strategic ’s key strategic

priorities, including agreed measures of success.priorities, including agreed measures of success.

2. Lack of clear senior management, ownership and leadership.2. Lack of clear senior management, ownership and leadership.

3. Lack of effective stakeholder engagement.3. Lack of effective stakeholder engagement.

4. Lack of skills and proven approach to project and risk management4. Lack of skills and proven approach to project and risk management

5. Lack of understanding of and contact with the supply industry at 5. Lack of understanding of and contact with the supply industry at senior levels in the organisationsenior levels in the organisation

6. Evaluation of proposals driven by initial price rather than long term 6. Evaluation of proposals driven by initial price rather than long term value for money (especially securing delivery of business benefits).value for money (especially securing delivery of business benefits).

7. Too little attention to breaking development and implementation into 7. Too little attention to breaking development and implementation into manageable steps.manageable steps.

8. Non-integration of customer, supplier, user and project management 8. Non-integration of customer, supplier, user and project management teamteam

The need for holistic thinkingThe need for holistic thinking

I’m glad the hole isn’t in our end!

Risk Management: Risk Leadership:

1. Works to a defined scope, budget, quality and Programme.

Recognises the possibility of different outcomes and tries to ensure that risk activities are directed towards making an acceptable set of outcomes more likely

2. Uses the instrumental lifecycle image of risk management as a linear sequence of tasks to be performed on an objective entity using codified knowledge, procedures and techniques, and based on an image of projects as apolitical production processes

Uses concepts and images which focus on social interaction among people, understanding the flux of events and human interaction, and the framing of projects within an array of social agenda, practices, stakeholder relations, politics and power.

3. Manages process to ensure complicated projects of people and technology are kept running smoothly.

Develops behaviours and confidence in team through scenario planning and team building to identify and respond to risks and opportunities.

4. Establishes detailed steps, processes and timetables for risk management.

Understands the ‘many acceptable futures’ proposition and manages risk to produce the changes needed to achieve the acceptable outcomes.

5. Practitioners as implementers of the risk process. Training and development which produces: practitioners who can follow detailed procedures and techniques, prescribed by project management methods and tools.

Practitioners as reflective listeners. Learning and development facilitates the development of reflective practitioners who can learn, operate and adapt effectively in complex project environments, through experience, intuition and the pragmatic application of theory in practice.

Way Forward Risk LeadershipWay Forward Risk Leadership

Risk Management: Risk Leadership:

6. Applies concepts and methodologies which focus on risk management for product creation or improvement of a physical product, system or facility etc and monitored and controlled against specification (quality), cost and time.

Applies concepts and frameworks which focus on risk management as value creation. Whilst, aware that ‘value’ and ‘benefit’ will have multiple meanings linked to different purposes for the organisation, project and individual.

7. Attempts to control risk by monitoring results, identifying deviations from the plan and developing mitigation actions to return to plan.

Adapts the risk process to overcome major political, bureaucratic and resource barriers to develop change in behaviours through trust and managing expectations.

8. Based on the assumption that the risk model is (assumed to be) the actual ‘terrain’ (i.e. The actual reality ‘out there’ in the world).

Based on the development of new risk models and theories which recognise and take cognisance of the complexity of projects and project management, at all levels and that the model is only part of the complex ‘terrain’.

9. Seeks predictability and order. Has learnt to live with chaos, complexity, uncertainty and ambiguity and leads through example to a successful conclusion.

Way Forward Risk LeadershipWay Forward Risk Leadership

'This book takes project risk management firmly onto a higher and wider plane. We thought we knew what project risk management was and what it could do. David Hancock shows us a great deal more of both. David Hancock has probably read more about risk management than almost anybody else, he has almost certainly thought about it as much as anybody else and he has quite certainly learnt from doing it on very difficult projects as much as anybody else. His book draws fully on all three components. For a book which tackles a complex subject with breadth, insight and novelty - its remarkable that it is also a really good read. I could go on!' –

Dr Martin Barnes CBE FREng President, The Associat ion for Project Management

'This book takes project risk management firmly onto a higher and wider plane. We thought we knew what project risk management was and what it could do. David Hancock shows us a great deal more of both. David Hancock has probably read more about risk management than almost anybody else, he has almost certainly thought about it as much as anybody else and he has quite certainly learnt from doing it on very difficult projects as much as anybody else. His book draws fully on all three components. For a book which tackles a complex subject with breadth, insight and novelty - its remarkable that it is also a really good read. I could go on!' –

Dr Mart in Barnes CBE FREng President, The Associat ion for Project Management

'In highlighting the complexity of many of today's problems and defining them as tame, messy or wicked, David Hancock brings a new perspective to the risk issues that we currently face.  He challenges risk managers, and particularly those involved in project risk management, to take a much broader approach to the assessment of risk and consider the social, political and behavioural dimensions of each problem, as well as the scientific and engineering aspects with which they are most comfortable. In this way, risks will be viewed more holistically and managed more effectively than at present.'

Dr Lynn T Drennan, Chief Execut ive, Alarm, the public r isk management association

'In highlighting the complexity of many of today's problems and defining them as tame, messy or wicked, David Hancock brings a new perspective to the risk issues that we currently face.  He challenges risk managers, and particularly those involved in project risk management, to take a much broader approach to the assessment of risk and consider the social, political and behavioural dimensions of each problem, as well as the scientific and engineering aspects with which they are most comfortable. In this way, risks will be viewed more holistically and managed more effectively than at present.'

Dr Lynn T Drennan, Chief Executive, Alarm, the public r isk management association

'This compact and thought provoking description of risk management will be useful to anybody with responsibilities for projects, programmes or businesses. It hits the nail on the head in so many ways, for example by pointing out that risk management can easily drift into a check-list mindset, driven by the production of registers of numerous occurrences characterised by the Risk = Probablity x Consequence equation. David Hancock points out that real life is much more complicated, with the heart of the problem lying in people, so that real life resembles poker rather than roulette. He also points out that while the important thing is to solve the right problem, many real life issues cannot be readily described in a definitive statement of the problem. There are often interrelated individual problems with surrounding social issues and he describes these real life situations as ‘Wicked Messes’. Unusual terminology, but definitely worth the read, as much for the overall problem description as for the recommended strategies for getting to grips with real life risk management. I have no hesitation in recommending this book.'

Sir Robert Walmsley KCB FREngChairman of the Board of the Major Projects Associat ion

'This compact and thought provoking description of risk management will be useful to anybody with responsibilities for projects, programmes or businesses. It hits the nail on the head in so many ways, for example by pointing out that risk management can easily drift into a check-list mindset, driven by the production of registers of numerous occurrences characterised by the Risk = Probablity x Consequence equation. David Hancock points out that real life is much more complicated, with the heart of the problem lying in people, so that real life resembles poker rather than roulette. He also points out that while the important thing is to solve the right problem, many real life issues cannot be readily described in a definitive statement of the problem. There are often interrelated individual problems with surrounding social issues and he describes these real life situations as ‘Wicked Messes’. Unusual terminology, but definitely worth the read, as much for the overall problem description as for the recommended strategies for getting to grips with real life risk management. I have no hesitation in recommending this book.'

Sir Robert Walmsley KCB FREngChairman of the Board of the Major Projects Association

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