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44   PM NETWORK june 2012 WWW.PMI.ORG
Talking Points
       Poor risk
communication
 can derail your
 project. Here’s
      when and
   how to warn
       your key
   stakeholders
about potential
        threats.


 Risk

     by Denene Brox




                          june 2012 PM NETWORK   45
71
             E                                               Even the most stringent risk management won’t get the job done without
                                                             strategic communication. In fact, poor communication is a risk itself if key
                                                             stakeholders aren’t kept informed.
                                                                 Project managers are on the front line of communicating potential and
                                                             impending risks to an assortment of stakeholders—and each demands dif-
                                                             ferent information. To articulate risks, begin here:

                                                             Understanding Appetites and Tolerances
                                                             Project managers must first understand their organization’s risk tolerance.
                                                                 “As a project manager, you don’t have the authority to overstep the
                                                             bounds of risk tolerance for your organization,” says Barry Molnaa, PMP,
                                                             Los Angeles, California, USA-based director of project management at
                                                             Arcadis, a design, engineering and management consultancy for the infra-
                                                             structure, water, environment and construction industries. “It’s important
                                                             to have an understanding of what risks your organization is willing to
                                                             tolerate and how to manage those risks.”
                                                                 An organization’s risk appetite can vary based on its age, says Evan
                                                             Wheeler, director of information security for Omgeo, a financial trade
                                                             processing service provider in Boston, Massachusetts, USA. A growing
                                                             company may be willing to shoulder more risks to move forward quickly,
                                                             whereas a well-established corporation could tend to be more risk-averse.
                                                                 “Anyone who’s in a risk-management role needs to understand his or


           percent                                           her company’s threshold,” he says. “You need to know when you’ve hit that
                                                             threshold and when something needs to be reviewed and a decision made
                                                             about how to proceed.”
           The portion of                                        Project managers who work for a variety of clients need to acquaint

           organizations that                                themselves with each client’s risk tolerance at the start of every project.
                                                                 Even if his clients have firm risk-management processes in place, senior
           now practice risk                                 consultant Marc Burlereaux, PMI-RMP, PMP, PgMP, conducts a risk
                                                             analysis on every initiative. He’s currently working as a European release
           management                                        manager for a private bank in Geneva, Switzerland.
                                                                 At the beginning of each project, he holds a kickoff meeting with the
           Source: PMI 2012 Pulse of the Profession Report   sponsor to evaluate the risk appetite depending on certain criteria, includ-
                                                             ing whether the project is tactical or strategic, and what the change impact
                                                             will be.
                                                                 Some organizations don’t have a project management risk policy estab-
                                                             lished, putting the onus on project managers. Such was the case at Contax,
                                                             a company that deploys contact centers, when Fabio Pitorri, CAPM, PMI-
                                                             RMP, PMI-SP, PMP, PgMP, came on board. Mr. Pitorri, a consultant and



46   PM NETWORK june 2012 WWW.PMI.ORG
instructor at Dinsmore Associates in São Paulo, Brazil, got up to speed
by studying project documents, reading the project management
office bibliography and interviewing stakeholders. He then developed
a risk-management plan that he presented to executives for approval.
    Once you have a solid understanding of your company’s risk-
tolerance threshold, you’re better equipped for an effective risk com-
munications plan.

Targeted Messaging                                                               As a project
Each of your various project stakeholders has his or her own agenda              manager, you
and goals. Your organization’s executive team requires particular
                                                                                 don’t have
                                                                                 the authority
information and a different communication style than your team                   to overstep
members, who are involved in the day-to-day details of delivery.                 the bounds of
    “Generally, as you go further up the corporate chain, people want            risk tolerance
to see more of a summarized review,” Mr. Wheeler says.                           for your
    Your job as a project manager is to balance those various needs              organization.
                                                                                 — Barry Molnaa, PMP, Arcadis,
to communicate risks and risk-mitigation actions in ways that are                Los Angeles, California, USA
relevant to each of your stakeholders. Gather that information during
your early risk-tolerance exploration phase.
    Keep these points in mind when it comes time to articulate risk for
four different groups: executives/senior management, team members,
business managers and external stakeholders.




                                           Executives/Senior Managers
                                           Executive leadership is concerned with the overall success of the project
                                           and may define success differently than someone who’s actually working
                                           on the project, says Mr. Molnaa, who’s also a risk analysis and project
                                           management instructor at UCLA Extension, part of the University of Cali-
                                           fornia at Los Angeles. When articulating risk to this group, point out the
                                           severity and likelihood of a particular risk event, he suggests.
                                               “Senior management needs enough detail in terms of milestones to
                                           gauge whether progress is being made, so they want to see major mile-
                                           stones,” Mr. Wheeler says. “Senior leaders may not want to know all the
                                           gory details about how you came to a conclusion.”
                                               If a risk can be mitigated by adjustments within the control of the proj-
                                           ect team and the completion date isn’t affected, then it probably doesn’t
                                           need to bubble up to the executive team level.
                                               “Senior leadership needs to be aware when trade-offs must be made,”
                                           he explains. “Maybe another project might have to be delayed to keep this
                                           one on track, or another internal initiative might need to be postponed.
                                           Another scenario is trade-offs might need to be made in terms of the deliv-
                                           erables from the project. Some nice-to-haves might have to get dropped to
                                           allow for the essential targets to be met.”




                                                                                                                 june 2012 PM NETWORK   47
Team Members
                 Project team members are working at the task level and appre-
                 ciate more details on how impending or potential risks will
                 affect their work, Mr. Molnaa says. “They’re asking questions
                 such as, ‘Is my task going to be completed on time? How does                         Project team
                 what I do on my task affect what happens on subsequent tasks?’”
                     Stakeholders at the project level likely will not just want to
                                                                                                      members
                 know what the issues are, but also a detailed account of how                         appreciate more
                 those were prioritized and how they will be mitigated, Mr.
                 Wheeler says.                                                                        details on how
                     Regular team meetings keep team members abreast of
                 risks and action plans throughout the initiative’s life cycle, he
                                                                                                      impending or
                 suggests.                                                                            potential risks will
                     If the need arises to discuss particular risks, schedule a
                 meeting with the relevant project team members. “Identify                            affect their work.
                 appropriate risk response actions, assign ownership of the risk
                 to a specific team member, and develop a risk plan and moni-
                 toring approach,” Mr. Molnaa says.




                                              Business Managers
                                              Business managers tend to have simple priorities and usually are most
                                              concerned with completing projects on time and within budget, Mr.
                                              Wheeler notes.
                                                  “They want to look at the big picture, so when you have multiple poten-
                                              tial issues to report, look for commonality to group them together,” he
                                              advises. “You might categorize them by root cause, by consequences or by
                                              common mitigations. This way, the management team gets a feeling for
                                              the magnitude of the problem without having to read through the detail of
                                              every individual risk.”
                                                  When there is a risk to the quality of a client relationship, your business
                                              managers will want to know about it as soon as possible. As a consultant for
                                              an engineering firm, Mr. Molnaa’s business managers aren’t only focused
                                              on profit.
                                                  “They’re concerned about making sure that we maintain a consistent
                                              level of quality on our deliverables that allows us to maintain a high level of
                                              client satisfaction,” he explains. “When you’re doing outside projects, most
                                              of your projects come from repeat business.”
                                                  To communicate that you’re maintaining a positive relationship with
                                              your clients, regularly report on any potential risks that could hamper
                                              the relationship.



48   PM NETWORK june 2012 WWW.PMI.ORG
External Stakeholders
Communicating risk to external stakeholders can be tricky,
Mr. Molnaa says. Because this group isn’t familiar with the
particulars of project risk management, you have to fully
explain concepts, avoid jargon and show benefits to gain
acceptance.
    For instance, the public might react negatively to an
                                                                 Because
infrastructure project, focusing on short-term inconve-
niences during construction. One method Mr. Molnaa has
                                                                 external
found effective is to hold meetings and invite the public to
ask questions.
                                                                 stakeholders
    “It’s important that we communicate the long-term            aren’t familiar
benefits such as less traffic congestion in the end,” he says.
    For other external stakeholders, Mr. Pitorri has found       with the particulars
that explaining risk on an individual basis can be effective.
That’s how he chose to communicate with external stake-          of project risk
holders on a project to replace an important infrastructure
component at a contact center with 5,000 employees. The
                                                                 management,
implementation generated the need to turn off the build-
ing’s power for 10 minutes—interfering with the workflow
                                                                 you have to fully
of other building occupants.
    A key impact Mr. Pitorri needed to communicate was
                                                                 explain concepts,
that the power might not be reestablished after 10 minutes.      avoid jargon and
When explaining the risk, he emphasized that the activity
was scheduled to take place over the weekend at midnight,        show benefits to
which greatly mitigated the impact by reducing the number
of people who would suffer if that risk occurred.                gain acceptance.
    “However, there still were some non-related clients who
needed to be at work during the shutdown,” Mr. Pitorri says.
“To avoid confusion, risks were identified and discussed
individually with each one, and potential problems were
presented to each.”
    While the project was completed successfully and with
minimal unexpected interruption, Mr. Pitorri found that
communicating ahead of time gave external stakeholders
and the project team ample time to plan together their risk
responses and maintain positive relationships.
    “The main lesson learned was that we can deliver a more
successful project if we properly interact and communicate
with all related stakeholders,” he says. PM



                                                                           june 2012 PM NETWORK   49

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Revista PM Network

  • 1. 44 PM NETWORK june 2012 WWW.PMI.ORG
  • 2. Talking Points Poor risk communication can derail your project. Here’s when and how to warn your key stakeholders about potential threats. Risk by Denene Brox june 2012 PM NETWORK 45
  • 3. 71 E Even the most stringent risk management won’t get the job done without strategic communication. In fact, poor communication is a risk itself if key stakeholders aren’t kept informed. Project managers are on the front line of communicating potential and impending risks to an assortment of stakeholders—and each demands dif- ferent information. To articulate risks, begin here: Understanding Appetites and Tolerances Project managers must first understand their organization’s risk tolerance. “As a project manager, you don’t have the authority to overstep the bounds of risk tolerance for your organization,” says Barry Molnaa, PMP, Los Angeles, California, USA-based director of project management at Arcadis, a design, engineering and management consultancy for the infra- structure, water, environment and construction industries. “It’s important to have an understanding of what risks your organization is willing to tolerate and how to manage those risks.” An organization’s risk appetite can vary based on its age, says Evan Wheeler, director of information security for Omgeo, a financial trade processing service provider in Boston, Massachusetts, USA. A growing company may be willing to shoulder more risks to move forward quickly, whereas a well-established corporation could tend to be more risk-averse. “Anyone who’s in a risk-management role needs to understand his or percent her company’s threshold,” he says. “You need to know when you’ve hit that threshold and when something needs to be reviewed and a decision made about how to proceed.” The portion of Project managers who work for a variety of clients need to acquaint organizations that themselves with each client’s risk tolerance at the start of every project. Even if his clients have firm risk-management processes in place, senior now practice risk consultant Marc Burlereaux, PMI-RMP, PMP, PgMP, conducts a risk analysis on every initiative. He’s currently working as a European release management manager for a private bank in Geneva, Switzerland. At the beginning of each project, he holds a kickoff meeting with the Source: PMI 2012 Pulse of the Profession Report sponsor to evaluate the risk appetite depending on certain criteria, includ- ing whether the project is tactical or strategic, and what the change impact will be. Some organizations don’t have a project management risk policy estab- lished, putting the onus on project managers. Such was the case at Contax, a company that deploys contact centers, when Fabio Pitorri, CAPM, PMI- RMP, PMI-SP, PMP, PgMP, came on board. Mr. Pitorri, a consultant and 46 PM NETWORK june 2012 WWW.PMI.ORG
  • 4. instructor at Dinsmore Associates in São Paulo, Brazil, got up to speed by studying project documents, reading the project management office bibliography and interviewing stakeholders. He then developed a risk-management plan that he presented to executives for approval. Once you have a solid understanding of your company’s risk- tolerance threshold, you’re better equipped for an effective risk com- munications plan. Targeted Messaging As a project Each of your various project stakeholders has his or her own agenda manager, you and goals. Your organization’s executive team requires particular don’t have the authority information and a different communication style than your team to overstep members, who are involved in the day-to-day details of delivery. the bounds of “Generally, as you go further up the corporate chain, people want risk tolerance to see more of a summarized review,” Mr. Wheeler says. for your Your job as a project manager is to balance those various needs organization. — Barry Molnaa, PMP, Arcadis, to communicate risks and risk-mitigation actions in ways that are Los Angeles, California, USA relevant to each of your stakeholders. Gather that information during your early risk-tolerance exploration phase. Keep these points in mind when it comes time to articulate risk for four different groups: executives/senior management, team members, business managers and external stakeholders. Executives/Senior Managers Executive leadership is concerned with the overall success of the project and may define success differently than someone who’s actually working on the project, says Mr. Molnaa, who’s also a risk analysis and project management instructor at UCLA Extension, part of the University of Cali- fornia at Los Angeles. When articulating risk to this group, point out the severity and likelihood of a particular risk event, he suggests. “Senior management needs enough detail in terms of milestones to gauge whether progress is being made, so they want to see major mile- stones,” Mr. Wheeler says. “Senior leaders may not want to know all the gory details about how you came to a conclusion.” If a risk can be mitigated by adjustments within the control of the proj- ect team and the completion date isn’t affected, then it probably doesn’t need to bubble up to the executive team level. “Senior leadership needs to be aware when trade-offs must be made,” he explains. “Maybe another project might have to be delayed to keep this one on track, or another internal initiative might need to be postponed. Another scenario is trade-offs might need to be made in terms of the deliv- erables from the project. Some nice-to-haves might have to get dropped to allow for the essential targets to be met.” june 2012 PM NETWORK 47
  • 5. Team Members Project team members are working at the task level and appre- ciate more details on how impending or potential risks will affect their work, Mr. Molnaa says. “They’re asking questions such as, ‘Is my task going to be completed on time? How does Project team what I do on my task affect what happens on subsequent tasks?’” Stakeholders at the project level likely will not just want to members know what the issues are, but also a detailed account of how appreciate more those were prioritized and how they will be mitigated, Mr. Wheeler says. details on how Regular team meetings keep team members abreast of risks and action plans throughout the initiative’s life cycle, he impending or suggests. potential risks will If the need arises to discuss particular risks, schedule a meeting with the relevant project team members. “Identify affect their work. appropriate risk response actions, assign ownership of the risk to a specific team member, and develop a risk plan and moni- toring approach,” Mr. Molnaa says. Business Managers Business managers tend to have simple priorities and usually are most concerned with completing projects on time and within budget, Mr. Wheeler notes. “They want to look at the big picture, so when you have multiple poten- tial issues to report, look for commonality to group them together,” he advises. “You might categorize them by root cause, by consequences or by common mitigations. This way, the management team gets a feeling for the magnitude of the problem without having to read through the detail of every individual risk.” When there is a risk to the quality of a client relationship, your business managers will want to know about it as soon as possible. As a consultant for an engineering firm, Mr. Molnaa’s business managers aren’t only focused on profit. “They’re concerned about making sure that we maintain a consistent level of quality on our deliverables that allows us to maintain a high level of client satisfaction,” he explains. “When you’re doing outside projects, most of your projects come from repeat business.” To communicate that you’re maintaining a positive relationship with your clients, regularly report on any potential risks that could hamper the relationship. 48 PM NETWORK june 2012 WWW.PMI.ORG
  • 6. External Stakeholders Communicating risk to external stakeholders can be tricky, Mr. Molnaa says. Because this group isn’t familiar with the particulars of project risk management, you have to fully explain concepts, avoid jargon and show benefits to gain acceptance. For instance, the public might react negatively to an Because infrastructure project, focusing on short-term inconve- niences during construction. One method Mr. Molnaa has external found effective is to hold meetings and invite the public to ask questions. stakeholders “It’s important that we communicate the long-term aren’t familiar benefits such as less traffic congestion in the end,” he says. For other external stakeholders, Mr. Pitorri has found with the particulars that explaining risk on an individual basis can be effective. That’s how he chose to communicate with external stake- of project risk holders on a project to replace an important infrastructure component at a contact center with 5,000 employees. The management, implementation generated the need to turn off the build- ing’s power for 10 minutes—interfering with the workflow you have to fully of other building occupants. A key impact Mr. Pitorri needed to communicate was explain concepts, that the power might not be reestablished after 10 minutes. avoid jargon and When explaining the risk, he emphasized that the activity was scheduled to take place over the weekend at midnight, show benefits to which greatly mitigated the impact by reducing the number of people who would suffer if that risk occurred. gain acceptance. “However, there still were some non-related clients who needed to be at work during the shutdown,” Mr. Pitorri says. “To avoid confusion, risks were identified and discussed individually with each one, and potential problems were presented to each.” While the project was completed successfully and with minimal unexpected interruption, Mr. Pitorri found that communicating ahead of time gave external stakeholders and the project team ample time to plan together their risk responses and maintain positive relationships. “The main lesson learned was that we can deliver a more successful project if we properly interact and communicate with all related stakeholders,” he says. PM june 2012 PM NETWORK 49