“…. But the QSRA output says it’s going to take too long and cost too much!”
How many times have we heard the above? Why do organisations spend tens of thousands of pounds/dollars/ *choose your currency* running risk models and quantitative schedule risk analysis (QSRA) again and again and again to get slight variants of same answer? How much money is being wasted by clients to get an answer that’s “palatable” rather than the true answer that action can be taken against?
My article this week focuses on the value of risk management and a shared concern regarding the distractions that the current risk profession has, which are starting to hamper the potential value offered. I provide a hypothetical example that some if not many may relate to.
A client asks for a QSRA to be produced in tight timescales to facilitate a decision. The inputs are rushed, and the outputs are uncomfortable. The management team disregards the output and asks for a more thorough process. The team build a more comprehensive model and a more realistic output. The management team is still uncomfortable. The modelling process begins again.
From the above example, what’s missing here? Risk Management.
In our hypothetical example above, what isn’t disclosed is that during the modelling process, a significant risk impacts the organisation and results in significant cost and schedule delays to key strategic objectives, putting the business in jeopardy. This isn’t “expected” because the team are huddled in rooms until late at night, day in day out, trying to build a QSRA which facilitates a pre-conceived answer. Not good.
The risk professionals should in fact be managing the organisation’s risks and ensuring that impacts are mitigated to be as low as practicably possible and that suitable fallback arrangements are in place.
QSRA is a fundamental requirement to any major capital investment and programmatic deliverables in today’s significant industries across the globe however, it isn’t perfect. Should it be, though?
“Striving to be better, oft we mar what’s well” – William Shakespeare
QSRA should be an insight into the potential, not an answer written in blood. The value of QSRA is in the process and understanding of its outputs to better deliver however, many risk professionals find themselves striving for perfection and marring the true value of risk management: targeted management and mitigation of risks, and realisation of opportunities.
The development of a robust QSRA challenges the team to make decisions and realise “gaps” in group knowledge, or sensitivities/ variations in approaches driven by ambiguity in the scope. This uncertainty drives jointly agreed assumptions of which an attendant risk may be required.
Identification of the risk was the defined output before the process began however, a wealth of value has been attained in running the process by aligning the delivery team’s thinking in terms of execution to meet the delivery requirements.
Once a QSRA output has been produced and is representative of a set of robust inputs, that’s it. STOP!
To make it “palatable” to the organisation, now spend the remaining time working out what the top impacting risks are, what the greatest areas of uncertainty are and how you plan to manage these down to a tolerable level. If necessary, refine the inputs based on the successful completion of these proactive actions and re-run the model. If the output still isn’t palatable, hunt for opportunities and agree management strategies for the realisation of these. If the answers still aren’t palatable then perhaps this is the wrong delivery vehicle to achieve the organisation’s objectives.
Regardless of where time pressures force a “STOP” in the above process, use the outputs to quickly start taking risk management action. This is the TRUEST value of the risk management profession. Targeted management of risks and opportunities to bring attainment of strategic objectives closer in time and cheaper in cost.
Everything else is just noise along the way. Remain focused and ensure that value is delivered.