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Friday, August 31, 2012

Would you know an Unacceptable Risk if it jumped up and bit you?

[Also available as a podcast]

When I was younger, I was quite risk-averse. I said "no" to a lot of things that some might consider a "safe-ish" activity - like Bungee Jumping or riding a motorcycle. (Dirt bikes were OK though, because I never got going that fast).

So why did I find myself backing away from a snake charmer who was walking towards me with a fully loaded Cobra held out in front of him?

More to the point, why did I let him put it around my neck in the first place?

Most would say that this definitely falls under the category of unacceptable risk. Some might say it was the adventures of youth. I would simply call it stupid.



February 1993 - my first day in New Delhi, India for a 2-week trade show. On the ride in from the airport in the middle of the night, I had passed a man riding an elephant down the street. An amazing country. I was solo for the first two days before the rest of the team showed up, and I was looking for something to do after I had checked out the booth at the fairgrounds. We had organized for cars with drivers, because it takes a whole different set of skills to drive there.

My driver had pulled over to the side of the road so that I could experience some of the local culture and tourist attractions, which apparently involved getting your photo taken with a poisonous snake draped over your shoulders. 

It must have been the smog affecting my brain, because I agreed to do it.

As you might expect, I was a bit nervous so I asked the charmer if it was safe - if the snake had been de-venomed. He nodded. So we proceeded, and the driver snapped a couple pictures of me with the charmer holding the snake across my shoulders.

It was only after he had removed the snake and I paid him that I realized my mistake. The charmer decided he wanted more money as I was walking back towards the car.  So he started to follow me. I turned to see the charmer pointing the "apparently de-venomed" Cobra directly at me like a weapon. Oops.

The driver stood between me and the charmer and signalled me to hand him some money. I did, and he passed it to the charmer, who seemed satisfied, un-cocked his Cobra and walked back to the basket.

I afterward learned that nodding meant "No" and wobbling your head side to side meant "Yes".

I  guess I should have read up on the cultural signals before I left on the trip.

Do you know an unacceptable risk when you see it?  Or does it literally have to (almost) bite you before you know it is "unacceptable"?

Defining Risk

In a previous article, we discussed the basic components of risk, the principles of pre-and post-event risk mitigation, and some basic risk assessment strategies. There is a continuum of risk - and where a specific risk falls will depend on the impact of the risk if it occurs, but also your personal or corporate risk tolerance. In the basic model, we looked at "High/Low impact" and "High/Low probability" in relation to anticipating risk events. But there is another aspect to risk management that is very important to consider, that may sometimes be less tangible and hard to quantify in numerical terms.

Is a risk "acceptable" or not? In order to determine this, we need to take a deeper look at managing risks.

Assessing Risk


In order to assess risk, you need accurate information, experience, and a solid dose of common sense (which apparently I was lacking at the time). If you don't know enough about the potential risk area, ask an expert, or at least a colleague who knows more about it than you. As a Project Manager, your job is to make sure that the team delivers - but it is not your job to know everything. Having an awareness of the big picture and the moving parts, yes - but you are not generally the detail expert. That is why you have teams with people who know each area much better than you do.
 
So employ their experience and skills when you do your planning and your risk assessments. More heads are better than one, especially when it comes to gauging risk. If you don't have anyone on your team who is experienced in that risk area, bring someone in from elsewhere in the organization, or bring in a consultant. If it is potentially a major concern, it may well be worth the investment of a few hours or days of someone with a keen eye and battle scars taking a closer look.

You also need to keep in mind the bigger picture beyond your corporate walls to fully consider the level of risk involved, and the true impact of what might happen. You might end up changing your project plan, scope and vision significantly if you determine that a high impact negative risk event is not only likely to occur if you continued along the current path - but would be completely unacceptable if it did. 

One thing to consider in your planning is that what may be "acceptable" to you may be completely unacceptable to others. So you need to be prepared to walk a mile in the others' shoes so you don't have a one-sided perspective.


Acceptable vs Unacceptable Risk

Acceptable risks are ones that you can generally live with if they occur. (Ideally, that everyone can live with.) You may have a delay in your schedule and/or additional costs, and perhaps disgruntled users or stakeholders. But at the end of the day, there is no real harm done. What you deem "acceptable" is relative based on your context, and may be very different for another person, project or business. 

An unacceptable risk might be defined as one that would do harm, fiscally or physically to person(s), a business or the environment. However, it is also fair to say that an "unacceptable risk" for one person might be quite acceptable to another.


Financial Risks
Your company might invest 10 million dollars on the "Next Big Thing" in the anticipation that if you are successful in the market, your product would be poised to bring in hundreds of millions or even billions of dollars in sales. That's a calculated risk by the stakeholders before they even start the project - and if they have deep enough pockets, it may be an acceptable risk. 

If, however you were a small company with an idea and very little funding and very little awareness of the potential market for your product, investing the last $10,000 you had might not be an acceptable risk. You might even lose your house, and have nowhere to go. 


For financial risks, deciding whether it is "acceptable" or not is generally dependent upon whether your business would survive, or the project could still be completed (or worth completing) if the risk event occurred.


Material or Bodily Risk
If you are a skilled mountaineer, climbing Everest or a sheer rock face may be seen as an acceptable risk because you are well prepared for the activity. Yes, you might fall to your death or suffer hypothermia, but the chances may be very low due to your level of experience, conditioning and confidence in your abilities and those of those going with you, and the quantity and quality of your gear.

If, however you were new to the outdoors, the same activity would not pose an acceptable risk, as you would likely be completely unprepared and much more likely to suffer a mishap, or even die.

Preparedness and experience are key contributors in assessing risk - and not just for yourself, but for the entire team, project and stakeholders. A seasoned mountaineer would refuse to take a new, untested person on the hard climbs with them. They would need to ensure that they had been prepared, conditioned and practiced on the smaller climbs first, with lower elements of risk. Eventually they would gain enough experience to join you on the difficult slopes.

If you were constructing a bridge or a building that thousands of people used every day, it would be unacceptable for it to fail or collapse, so all planning and quality control efforts should be utilized to ensure that will not happen - as the injuries and loss of life would be unacceptable.

Similarly, if your project may cause environmental damage should something go wrong, you need to assess the risks and take active pre-event risk mitigation strategies in order to avoid an occurrence.

Some of it is just common sense (which can sometimes be hard to find during hectic times on a project).

When I sat down with the snake charmer, I thought I had good information but I misunderstood him, and also failed to use common sense. Things might have turned out badly for me, due to being naive (and stupid). I had based my assessment on the skills of the snake charmer being able to safely handle the snake, and my understanding it was no longer poisonous. The act of him later posing the snake as a weapon caused me to swiftly reassess the situation, and therefore the level and nature of the risk. Definitely "unacceptable" in hindsight, based on my normal aversion to risk.

The Sleep Test

If you are sill not sure about the acceptability of a risk, there is one way to get a gut feel for"acceptable" vs "unacceptable".


Would you be able to sleep at night if it happened? If you cared about someone else affected by the event, would you still be able to sleep with it?


Well, perhaps you always sleep like a baby. But let's take it up another notch. Could you live with yourself, should the risk event occur?

Balancing Risk

The partner company hired us a car and driver, so that we would not face the perils of driving on the New Delhi roads. It was an acceptable risk to have the car and driver get us from place to place, as they were local and familiar with the city and road rules. Every day while at home, we determine that driving our own car to the shopping mall, to work or to the kids' music recital is an acceptable risk - even though we could end up in a fiery crash. We judge that based on the condition of the vehicle, the condition of the roads and our own skills, we think will be able to navigate the streets to the destination and back again safely. That was the premise of hiring local drivers - that their skills and competence would significantly reduce the risk of any traffic mishaps. Well, that was the theory anyway.

We actually had two cars and two drivers due to the number of people at the trade show. One was very responsible and relatively risk-averse, and then there was the one who ended up driving me most of the time. He incidentally was also the guy who introduced me to the snake charmer. I should have seen it coming.

Having a driver was definitely a good idea, as the road rules are quite different in India (well, at least they were in 1993).There you could turn a good two-lane-each way marked road into four or more threads of traffic going each way, with cars, trucks, motorcycles and three-wheelers weaving along together at different speeds. They had foot-high curbs on the side of the road, and the only reasonable explanation I could think of was that they were trying to keep the vehicles off the sidewalk - they drove everywhere else!

It was when our driver pulled straight out into oncoming traffic for the first time that I realized that in the end, there was only one practical rule of the road. "If I am bigger than you, get out of my way!" There we were, across the center line, ploughing on ahead with the oncoming motorcycles and three-wheelers diving for safety on the other side of the road. Until a delivery truck came roaring straight at us that is, whereupon our driver promptly forced his way back into the traffic on our side of the road. He may have saved me from the snake, but I was convinced he had other plans to finish me off using his car.

I will admit, he was not all bad - he did employ active pre-event risk mitigation strategies while driving. Every time we overtook a bus going in the same direction, he was constantly beeping the horn, indicating to the bus "I am here! Don't swerve into my lane and crush me." I then began to notice the continual honking everywhere we went, by all sorts of vehicles - all announcing they were there and not to swerve into them. Apparently nobody does a shoulder check before changing lanes. But nobody was angry - if you heard that much honking in North America, it would indicate a lot of swearing and frustration.

As much as his driving unnerved me, he did keep us safe - and did a much better job of it than any of us foreigners could have managed. This was because he knew the conditions, how other people drove, and what to expect. All in all it was an "acceptable" risk, if a bit frightening for the passengers.

He did make me wonder one further time though - after leaving the reception at the Canadian embassy, he drove us back to the hotel. The road was not busy, and there was no oncoming traffic - but he was impatient with the drivers in front of him. So naturally, he pulled into the empty oncoming traffic lane. He was speeding along at nearly 100kph/60mph as we came up to a very large traffic circle, which had large concrete barriers running along the side of the entry and exit roads, merging into a solid point - a point which was rapidly getting closer. He just managed to pull back into our lane a few feet in front of the barrier before zooming around the circle to the exit on the far side.

A stiff drink was definitely in order when we got back to the hotel. Only 10 more days of this until we were to finish the trade show and get to go home.


Summary

Determining whether a risk is "acceptable" is not a simple matter, and it is certainly a situation where you need the team's input. Determining the acceptability of a risk should never rest with just one person. Sure, there may be a final decision-maker, but only after due consideration of the perspectives and opinions of the team are taken into account.

What may be acceptable to you may not be acceptable to the sponsor, the stakeholders, the company or the public at large. If you lack experience, you are more likely to underestimate the impact of a risk, and therefore judge it "acceptable" when a more seasoned person would not.

Conversely, a seasoned consultant may deem a risk as acceptable, but you as the new Project Manager may feel quite nervous about it. In the end - after listening to the counsel of others, you have to go with your gut - could you live with the risk event should it happen on your current path? If not, then you might override it and say it is not "acceptable" - or at least put more efforts into mitigating the risk to prevent it from happening.

As for me? I am not quite as risk-averse as I was when I was younger. Perhaps more "risk-mature" would be a better word. I still will not do a bungee jump, and although I have since considered riding a motorcycle, my wife has assured me it is not a good idea. But I do take some calculated risks, with open eyes and some common sense.


The good news is that I have already crossed off "put a poisonous snake on your neck" from my bucket list. Been there, done that - and got the photo. I don't ever need to do that again.




Good luck with your projects, and carefully consider what risks are "acceptable" on your projects by tapping the experience of your team.