Risk Happens!

Managing Risk and Avoiding Failure in Business Projects

Mike Clayton

I am just halfway through reading “Risk Happens!” and I would like to say what a great book it is! Compelling reading and I can’t put it down.

I am am a PM of 10+ years standing and I have never found such a concise read on risk management that provided so much valuable information.”


Project Management is a big part of how all sorts of organisations get things done. From small voluntary organisations to large corporations and Government departments, managers at all levels need to take on and deliver projects that range from thousand pound projects lasting days to multi-million pound projects taking years.

All of these projects have one thing in common: risk.

Risk Happens!

Things go wrong; the real world will not respect your hopes, plans or expectations. So you need to respond with a practical approach to managing project risk.  This book will give you just that.

Read Extracts

Group Think and Risky Shift extract, at A Girl’s Guide to Project Management, which also has a thorough book review.

Wait a moment… has the name changed?

If you knew that I had a book on project risk coming out called “Shift Happens!” and are wondering what’s going on, read the story of the book’s change of title.


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List of Tables, Checklists and Figures
Acknowledgements
Prologue

Introduction

Planning out Risk
The Risk Management Process

Identify Risks
Analyse Risks
Plan for Risks
Take Action on Risks
Risk Monitoring and Control

Risk Resilience
Involving Stakeholders in Risk Management
Appetite for Risk
The Psychology of Risk*
Risk Culture

Conclusion
Appendix A: List of Common Project Risks
Appendix B: Glossary
Appendix C: Learn More

From Elizabeth Harrin
Director, The Otobos Group

“This book is a solid introduction to risk management and would be good for beginners. There is a good glossary and an appendix of common project risks – great if you want a starting point for brainstorming risk on your own project.

The book is not method specific, so it doesn’t matter if you use PRINCE2, the PMI equivalent or any other national or international standard. There are useful tables and processes, which will save you having to work out a risk management process for yourself – handy if you are setting up a PMO and want to save some time. You could easily take what is in this book, tweak it a little to suit your project or company and implement a risk management approach straight away.”

Elizabeth is a project communications expert, founder of The Otobos Group and author of the award-winning blog, A Girl’s Guide to Project Management.

From Glen Alleman
Principle Member of Niwot Ridge LLC

“An accessible book on the topic of risk management is Mike Clayton’s Risk Happens! It’s easy to read has all the facts right and can be put to work.”

“Risk Happens! is a must read for anyone wanting to understand how to be a risk manager. Mike has a nice newsletter, speaks to the topic of risk from hands on experience, and is well grounded in the practical aspects of improving performance of both the people and processes.”

Glen is a senior Program and Project Control expert working on large scale complex systems projects in the US Aerospace industry.  He specialises in Programmatic Risk Management.  Glen’s blog, Herding Cats, is one of the most influential PM blogs.

From Ron Rosenhead
CEO of Project Agency

“In this book author Mike Clayton brings together I believe many of the ideas and practices that will help you and your company identify and manage risks in projects. What makes it so different from other books on this topic is that Mike uses very practical rather than academic approaches to project risks.

Practical approaches – there are well over 100 tools and techniques to use all based on a simple model of identifying your risks, analysing the risks, planning what to do to manage risks and actioning your plan. Included in the process is the need to monitor and control your plans and actions.

But, and here’s the key to the books success; it calls on some really practical approaches to identify and manage risks in projects.

The chapters that follow mirrors the above process and also includes looking at your risk resilience – a chapter that looks at issues such as scenario planning, contingency planning and business continuity. There is also another challenging chapter which I hope many of our clients will read: Appetite for Risk as well as The Psychology of Risk – I wonder how this will go down with you (and others in your company).

This is a good book that should find its way into many companies. It is applied common sense and should be mandatory reading for all involved in projects.”

From Leam Hall
Amazon.com Review

“In ‘Risk Happens:Managing Risk and Avoiding Failure in Business Projects‘ author Mike Clayton clearly spells out several ways to look at and deal with risk. His writing is easy to read and to the point and there are a good number of graphics to ensure the statements made are well communicated. As a new project manager I found Mike’s points easy to understand yet I realize that my risk management skills will only grow with practice. He’s given me several things to apply to my current projects and I look forward to more success!”

From “Busybee”
Amazon.co.uk Review

“This book covers (pretty much exhaustively) the types of risk you may encounter in any new project, in a concise and readable manner. I got this book by chance, but now intend to get more by the same author, as I like his style and the way in which he presents information. Rather than just being theoretical, this is a book which translates properly into real life and which I imagine will continue to be of use in the future. Highly recommended.” 

From Vic
Project Manager

“I am just halfway through reading “Risk Happens!” and I would like to say what a great book it is! Compelling reading and I can’t put it down.

I am am a PM of 10+ years standing and I have never found such a concise read on risk management that provided so much valuable information.”

Risk Happens! is filled with techniques, tips and tools.

This page gives you access to downloadable versions.  It also contains links to articles about risk and risk management on my main blog: Shift Happens! – which covers the topics of change, projects and risk.

Risk Management Templates

Risk Potential Review
Based on Table 4.2, this template offers a quick and effective assessment of the overall risk level of your project.

Risk Happens! Risk Register Template
This template collates all of the risk register elements illustrated in Tables 4.7, 5.17, 6.7, and 7.1.  The columns of this risk register are fully described in the book. (Excel format)

Risk Management Plan
Over-arching plan for risk management across your project

Risk Response Plan
For detailed response to an individual risk

Templates for related project controls

There are a whole load of extra downloadable project management resources on my Brilliant Project Leader page, including:

Risk and Risk Management articles

Click on these links for selected articles on the Shift Happens! blog.

Online Resources

Risk Toolkit: How to take care of risk in volunteering: a guide for organisations
The Institute for Volunteering Research and Volunteering England
If you work in the voluntary sector, this is a very helpful pamphlet to get you started.
You can download a pdf from the Volunteering England website.

Shift Happens! Mike Clayton’s blog on change, projects and risk.

For my money, the best Project Management Bloggers on the subject of project risk management are:

Group Think and Risky Shift extract, at A Girl’s Guide to Project Management.

Elizabeth Harrin (of “a Girl’s Guide to Project Management”) talks about using
Cost Breakdown Structures to create budget contingency, in a
video and transcript on her Gantthead blog, The Money Files.

Elizabeth Harrin talks about CBS

Risk Happens! is full of useful tables and checklists

One of the things that makes Risk Happens! such a valuable resource for project managers and project leaders at all levels are the 60 tables and check-lists that it contains.  You will want to bookmark these and refer to them frequently.

Here is a full list of the tables:

  1. Table 1.1: Why Crises Happen
  2. Table 2.1: Estimating Techniques
  3. Table 2.2: Common Estimating Errors and Omissions
  4. Table 3.1: Variables of scale and complexity for your risk management process
  5. Table 3.2: Drivers of scale and complexity for your risk management process
  6. Table 3.3:  Sample Roles and Responsibilities for Project Risk Management
  7. Table 3.4: Reasons for documenting aspects of your risk management process
  8. Table 3.5: Typical Contents of a Risk Management Plan
  9. Table 4.1: Core Project Documents
  10. Table 4.2: Typical considerations for a Project Risk Potential Review
  11. Table 4.3: Indicative Risk Kick-off Workshop Agenda
  12. Table 4.4: Risk Identification using Personal Experience
  13. Table 4.5: SPECTRES
  14. Table 4.6: Risk Categories
  15. Table 4.7:  Risk Register Part 1
  16. Table 4.8:  Formal Description of a Risk
  17. Table 5.1:  Typical Descriptors for Likelihood
  18. Table 5.2:  Typical Probability Ranges for Likelihood
  19. Table 5.3:  Suggested Probability Ranges for Likelihood
  20. Table 5.4:  Suggested General Scales for Impact
  21. Table 5.5:  Suggested Scales for Schedule Impact
  22. Table 5.6:  Suggested Scales for Financial Impact
  23. Table 5.7:  Suggested Scales for Quality Impact
  24. Table 5.8:  Suggested Scales for Scope Impact
  25. Table 5.9:  Suggested Scales for Reputational Impact
  26. Table 5.10:  Suggested Scales for Health, Safety or Security Impact
  27. Table 5.11:  Suggested Scales for Environmental Impact
  28. Table 5.12:  Frequently Used Numerical Scale for Likelihoods and Impacts
  29. Table 5.13:  Example of an Exponential Numerical Scale for Likelihoods and Impacts
  30. Table 5.14:  Failings of Risk Scoring Systems
  31. Table 5.15:  Traffic Light Status Definitions
  32. Table 5.16a:  RMS Method
  33. Table 5.16b:  RMS Method
  34. Table 5.16c:  RMS Method
  35. Table 5.16d:  RMS Method
  36. Table 5.17:  Risk Register Part 2
  37. Table 6.1:  Tactics to Remove Project Risk
  38. Table 6.2:  Tactics to Reduce the Likelihood of Project Risk
  39. Table 6.3:  Tactics to Reduce the Impact of Project Risk
  40. Table 6.4:  Contingency Planning Process
  41. Table 6.5:  Elements of a Contingency Plan for Project Risk
  42. Table 6.6:  Risk Response Plan
  43. Table 6.7:  Risk Register Part 3
  44. Table 7.1:  Risk Register Part 4
  45. Table 8.1:  Leading Indicators of Project Risk
  46. Table 8.2:  Crashing the Timeline
  47. Table 9.1:  Scenario Planning Process
  48. Table 9.2:  Business Continuity Management Process
  49. Table 10.1:  The Stages of Resistance to Change
  50. Table 10.2:  Examples of Project Stakeholders
  51. Table 10.3:  Factors Affecting Stakeholders’ Attitudes to Risk
  52. Table 10.4:  Project Communication Strategy
  53. Table 10.5:  Stakeholder Communication Plan
  54. Table 11.1:  Typical Factors leading to a High Risk Project
  55. Table 13.1:  Typical Benefits of a Strong Risk Management Culture
  56. Table 13.2:  Elements of a Strong Organisational Risk Culture
  57. Table 13.3:  Steps in Creating a Strong Organisational Risk Culture
  58. Table 13.4:  Risk Management Maturity Levels
  59. Table 13.5:  Lessons Learned Register
  60. Table 13.6:  Post Project Risk Review

Risk Happens! is full of useful Diagrams and Figures

One of the things that makes Risk Happens! such a valuable resource for project managers and project leaders at all levels are the 57 Diagrams and Figures that it contains.  You may want to bookmark some of these and refer to them frequently.

Here is a full list of the figures:

  1. Figure 1.1: Risk Mirror
  2. Figure 1.2: Project Risk Management
  3. Figure 2.1: Project Cost-Risk Profile
  4. Figure 2.2: The Time-Cost-Quality Triangle
  5. Figure 2.3: The Time-Cost-Quality and Scope
  6. Figure 2.4: Project Scope
  7. Figure 2.5: Risk Breakdown Structure
  8. Figure 2.6:  Project Scope
  9. Figure 2.7: Product Breakdown Structure
  10. Figure 2.8: Work Breakdown Structure
  11. Figure 2.9:  RACI Chart
  12. Figure 2.10: P.E.R.T
  13. Figure 2.11: Slippage in Highly Dependent Tasks
  14. Figure 2.12: Islands of Stability in a Project Schedule
  15. Figure 2.13: Cost and Organisation Breakdown Structure
  16. Figure 3.1: The Risk Management Process
  17. Figure 3.2: Core Risk Management Documents
  18. Figure 4.1: Periodic Review to Identify Risks
  19. Figure 4.2: Starting Places for Identifying Project Risk
  20. Figure 4.3: SWOT Analysis
  21. Figure 4.4: Fishbone Diagram
  22. Figure 4.5: Fishbone Diagram, Stage 2
  23. Figure 4.6: Process Decision Programme Chart
  24. Figure 4.7: Formal Description of a Risk
  25. Figure 5.1: Likelihood versus Impact Chart
  26. Figure 5.2: Likelihood versus Impact Chart, with scoring
  27. Figure 5.3: Risk Dependency Map
  28. Figure 5.4: Likelihood versus Impact Chart, with colour zones
  29. Figure 5.5: Time to impact versus Likelihood, with bubble size representing Impact
  30. Figure 5.6: Time to impact versus complexity, with bubble size representing Impact
  31. Figure 5.7: Likelihoods of two independent events, with bubble size representing impact of combined outcome
  32. Figure 5.8: Budget impact versus Schedule impact, with bubble size representing Probability
  33. Figure 5.9: Decision Tree Example
  34. Figure 5.10: The Beta Function
  35. Figure 5.11: Examples of Statistical Distributions
  36. Figure 5.12: The “Sleep at Night Test” Results
  37. Figure 6.1: When to do Risk Planning
  38. Figure 6.2: Contingency Plan Process
  39. Figure 6.3: More Research in your Risk Management Process
  40. Figure 7.1: Take Action on Risks
  41. Figure 7.2: Consequential Risks arise from Treating and Existing Risk
  42. Figure 8.1: Risk Monitoring and Control
  43. Figure 8.2: Earned Value Analysis
  44. Figure 8.3: Risk Reporting – Scatter Plot
  45. Figure 8.4: Risk Reporting – Trend Analysis
  46. Figure 8.5: Risk Reporting – Category Analysis
  47. Figure 8.6: The Time-Cost-Quality and Scope
  48. Figure 9.1: Scenario Analysis
  49. Figure 9.2: Scenario Planning
  50. Figure 9.3: Business Continuity Management Planning
  51. Figure 10.1: Predicted Efficiency Gains following Project Handover
  52. Figure 10.2: Observed Efficiency Gains and Losses following Project Handover
  53. Figure 10.3: Stakeholder Management Process
  54. Figure 11.1: Risk Appetite
  55. Figure 11.2: Personality driven by Attitudes to Uncertainty and Consequences
  56. Figure 11.3: Risk Managers in Context
  57. Figure 11.4: Threat and Benefit Analysis for Potential Projects

Gerald Clayton

Dedication

For my father, Gerald Clayton,
whose attitude to risk still affects my every decision.

Read the blogs I wrote about what I learned from my father here.
Of particular relevance is “A Careful Way“.


Acknowledgements

I could not have written this book without the opportunities afforded me to manage projects and learn about risk by colleagues at Deloitte Consulting, from the early 1990s until 2002.  In particular, Gilbert Toppin, Brian Green, John Everett, George Owen, Tricia Bey, Chris Loughran and Richard Porter.  I also gained valuable insights about risk from many other colleagues – particularly Mark Warren, Charles Vivian and John Perry (whose article I rediscovered in preparing this book).

There are also a number of project management bloggers whom I must thank for their insights.  Often, their thinking is at a level well above that of this book, so my apologies to them, if a whole blog, or even series of blogs, has simply informed just one sentence, or simply the way I express an idea.  The details are important to me, so thank you in particular to Glen Alleman, Kailash Awati, and John Goodpasture,

I must also thank my wife, Felicity, who gave me the time to write this and read the manuscript carefully, with the eye of a risk management novice – for whom the book is intended.  She made me work just a little harder to explain what sometimes seems obvious.