We need to talk about risk

The pandemic has been a rude awakening. It has shown that we live in a world of unknown unknowns; no matter how much we account for, strategise about and measure risk, things can happen that risk registers are simply not equipped for.

In his 5 Minutes Podcast, Ricardo Vargas observes that our perceptions about risk are being skewed, even as we begin to emerge from the pandemic. Whether it is about efficacy of vaccines or when economies can ‘reopen’, information from news sources, colleagues and associates affects our perception of risk – which can influence decision-making. Vargas advises analysing data and facts from a wide range of sources in order to overcome cognitive bias.

So, have we reached the peak of risk management?

Speaking to the Manage This podcast, Prasad Kodukula talks about risks that are only evident in hindsight or retrospect, the pandemic being a good recent example.

“Many project managers are now struggling with the question of how to deal with a risk that they can’t put on a risk register. The answer is building a resilient project team.” He says such teams result from effective leadership that responds swiftly and changes strategy. Resilient project teams are also characterised by good communication.

“We’ve got to break down those silos so that we can communicate more freely and more quickly across different functions, because when we are talking about resiliency, it means the ability to put together a cross-functional team quickly that can work cohesively together.”

Third, he says, resilient project teams have to be empowered to act independently, but with the ability to focus on one problem alone. “They can’t be working on a list of projects. One project. This is it. We’ve got to build agile teams so that we have this resiliency.”

He cites Airbnb, which was at the brink of collapse in May 2020. “CEO Brian Chesky noticed something interesting was happening. People didn’t want to get on planes or stay in fancy hotels in far-flung places. They were interested in locations closer to home.” As Kodukula recounts, Chesky made the decision to empower his teams to change their algorithms on the website and the app so users would find places close by. “So, they quickly shifted their strategy. They focused, killing other projects, and within two months were back in business, and profitable again soon after.”

Management consultancy McKinsey has identified a set of common characteristics among organisations that showed resilience during the pandemic. One was the ability to create new forums and structures, or repurpose existing ones, to act as rapid decision-making bodies – able, for example, to accelerate procurement cycles to just days or purchase the technology required for employees to work from home.

According to McKinsey, these new structures have allowed organisations to cut the usual red tape and management layers that had led to previously slow decision-making: “Decisions could be accelerated if they could be overtly aligned to the organisation’s common purpose.” The consultancy cites Intel UK as an example, which used its decision-making forums to quickly shift employee focus and resources towards government, education and healthcare sectors, so it developed partnerships with pharmaceutical companies to aid in enabling vaccine production.

Building in greater responsiveness post-pandemic

In her LinkedIn blog, project management researcher and lecturer Ewa Sońta examines how COVID-19 is influencing project management in the short and long run and the implications for project managers’ competencies.

She observes that longer-term impacts include more attention to risk management and contingency planning, plus a recognition that virtual teams will be more effective and some teams will not go back to the office. They will stay virtual or go to a hybrid approach. She also predicts a simplification of project management practices and increased use of agile approaches.

According to McKinsey, many leaders are reflecting on how small, nimble teams built in a hurry to deal with the COVID-19 emergency made important decisions faster and better. Companies have learned that a “flatter organisation that delegates decision-making down to a dynamic network of teams is more effective”.

Sońta also picks up on a trend that management consultancies have observed, which is an increased focus on localising supply chains, as many global supply chains were interrupted during lockdowns in 2020, impacting businesses and projects.

It is still too early to appreciate how significantly the pandemic will shape project management. But if organisations are already seeing where more agile approaches have delivered successes and enabled resiliency, in the face of ‘unknown unknowns’, it stands to reason they will be seeing how these approaches can continue to be implemented or rolled out more extensively.

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