Part II – Risk Event Mitigation
As I noted in the last article on this topic, when Project Managers evaluate potential risk events, the first step after event identification is Qualitative Risk Analysis, which is a Subjective evaluation of the event probability and event impact to the project. We perform this type of analysis so we don’t spend a large amount of time and money analyzing risk events that either are highly unlikely to happen or will have minimum impact on our project if they do occur. At that time, I noted that until recently, a project manager would have considered a pandemic to be a highly unlikely event and would not had implemented a Quantitative Risk Analysis where serious probability and impact analysis would be performed. In the US, until mid-March, the risk management strategy for a pandemic such as COVID-19 would have been an Acceptance Strategy, as the low probability associated with a pandemic would have precluded a proactive response plan. When project managers consider an Acceptance Strategy there are two choices, Active Acceptance and Passive Acceptance. When a project manager uses a Passive Acceptance strategy, the project manager just assumes that if the risk event occurs the repercussions will be addressed when/if the risk event occurs. When a project manager uses an Active Acceptance strategy, the project manager establishes a contingency reserve for the project including amounts of time, money, and resources to be used if the project’s acceptable variances are exceeded. Examples of how this activity is performed by government entities and project managers are disaster preparedness plans for hurricanes, floods, and tornadoes in areas that are prone to these events.
As with all disaster preparedness plans the trick is to prepare enough to mitigate the damage as much as possible while spending the least amount of money and time developing and maintaining the plans. Preparing for a 25 to 50 year flood is tricky enough, preparing for a 100 year pandemic event is even more challenging because:
- Preparations will be very expensive even if they not robust
- Medical technology is constantly changing, so equipment will become obsolete
- Equipment degrades over time, even if never used
- Very successful implementation can give people the impression the event was not that bad and probably should have been addressed through passive acceptance
So how can governments and project managers, prepare for ‘black swans’ or events that occur very infrequently? Some thoughts on these issues are…
Preparations will be very expensive even if they not robust – when a project manager knows a risk event has very low probability of occurring and that preparing for it will be very expensive, the key is to provide mitigation for a minimum period of time, until resources can be mustered to provide an ‘acceptable solution’. In this situation, not letting the ‘perfect’ be the enemy of the ‘good’ needs to be taken to the level of just keeping the damage to a level where the project can be brought back on track as the situation is assessed and a permanent resolution is developed.
Simply put, acknowledging the potential for a disaster and considering what resources would have to be in place in the short run to keep total disaster at bay.
Medical technology is constantly changing, so equipment will become obsolete – whether dealing with a medical emergency or some other risk, technology is constantly changing so any risk management plan should have reviews at least every year to ensure that technology assumptions are still correct. I would not want to be addressing COVID-19 with a plan based on state of the art 1918 medical techniques
Equipment degrades over time, even if never used – Any risk mitigation plan that will require the stockpiling of equipment must address the dual issues of technology change noted above as well as equipment degradation. The plan should address upgrading equipment and disposal of old equipment well before the equipment becomes obsolete. Rotating new equipment in and disposing of old equipment on a routine basis ensure the old equipment can be sold for a reasonable price and that equipment stored is always up to date.
Very successful implementation can give people the impression the event was not that bad and probably should have been addressed through passive acceptance – There is always the chance that the mitigation plan goes so well that people don’t realize there ever was a serious problem, and as such preparing for future risk events is hampered. When I was managing a LAN/Desktop Support team, I used to tell my internal customers that if you have good IT support, you don’t realize you have an IT team, because ‘things, work’ As always this is a management communication challenge, and as every good project manager knows communications is one of their most important jobs.
In closing, the key to managing risk is having people involved who are responsible, competent, and able to communicate the value of risk management.
The next article in this series will address Lessons Learned from the efforts of government in the United States to minimize the impact of COVID-19… from a PMP Perspective. Obviously, it may be a while before I write that one as we don’t know how long this crisis will continue.
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