[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.50,0:00:04.43,Default,,0000,0000,0000,,Okay, let's have a look at\Nrisk management in practice
Dialogue: 0,0:00:04.46,0:00:08.47,Default,,0000,0000,0000,,And what I want to do\Nis to start with some basic concepts
Dialogue: 0,0:00:08.48,0:00:14.02,Default,,0000,0000,0000,,then focus on two difficult areas\Nin the risk process
Dialogue: 0,0:00:14.24,0:00:19.16,Default,,0000,0000,0000,,So, I guess if I asked you\Nto define the word 'risk'
Dialogue: 0,0:00:19.17,0:00:22.95,Default,,0000,0000,0000,,you would have some ideas\Nof what it meant
Dialogue: 0,0:00:22.97,0:00:26.48,Default,,0000,0000,0000,,We might not have a formal definition\Nthat we could quote,
Dialogue: 0,0:00:26.48,0:00:30.25,Default,,0000,0000,0000,,but we all have something in our minds\Nwhen we hear the word 'risk'
Dialogue: 0,0:00:30.27,0:00:33.97,Default,,0000,0000,0000,,This is what we think,\Nand maybe you think of things like this
Dialogue: 0,0:00:34.23,0:00:38.53,Default,,0000,0000,0000,,Maybe you feel like this little guy,\Nfacing some big ugly challenge
Dialogue: 0,0:00:38.53,0:00:41.79,Default,,0000,0000,0000,,that you know is just going to\Nsquash you flat.
Dialogue: 0,0:00:42.07,0:00:43.77,Default,,0000,0000,0000,,Maybe you feel like this guy.
Dialogue: 0,0:00:44.02,0:00:46.49,Default,,0000,0000,0000,,This is a real job in North Korea,
Dialogue: 0,0:00:47.77,0:00:51.37,Default,,0000,0000,0000,,and his job is to hold the target\Nfor other people to shoot at
Dialogue: 0,0:00:51.50,0:00:53.98,Default,,0000,0000,0000,,Sometimes project managers\Nhave the target here
Dialogue: 0,0:00:54.29,0:00:56.91,Default,,0000,0000,0000,,We feel like everybody is shooting at us\Nin our job
Dialogue: 0,0:00:57.76,0:01:01.99,Default,,0000,0000,0000,,Or maybe you just know there's something\Nnasty out there, waiting to get you
Dialogue: 0,0:01:02.47,0:01:05.70,Default,,0000,0000,0000,,And maybe that's what you think of\Nwhen you think of the word 'risk'
Dialogue: 0,0:01:06.36,0:01:09.57,Default,,0000,0000,0000,,Well that's partly true\Nbut it's not the whole truth.
Dialogue: 0,0:01:10.19,0:01:13.62,Default,,0000,0000,0000,,Risk is not the same\Nas uncertainty.
Dialogue: 0,0:01:14.22,0:01:16.96,Default,,0000,0000,0000,,Risk is related to uncertainty\Nbut they're different.
Dialogue: 0,0:01:17.67,0:01:23.83,Default,,0000,0000,0000,,So all risks are uncertain\Nbut not all uncertainties are risks.
Dialogue: 0,0:01:24.65,0:01:27.59,Default,,0000,0000,0000,,If you have a risk register\Nor a risk list,
Dialogue: 0,0:01:27.94,0:01:31.44,Default,,0000,0000,0000,,you don't have a million items in it,\Nor you shouldn't.
Dialogue: 0,0:01:31.96,0:01:34.51,Default,,0000,0000,0000,,You don't even probably have\Na thousand items in it,
Dialogue: 0,0:01:34.51,0:01:35.79,Default,,0000,0000,0000,,you have a smaller number.
Dialogue: 0,0:01:36.71,0:01:40.01,Default,,0000,0000,0000,,Although there are millions\Nof uncertainties in the world.
Dialogue: 0,0:01:40.40,0:01:44.31,Default,,0000,0000,0000,,So how do we decide which uncertainties\Nwe're going to call 'risk'?
Dialogue: 0,0:01:44.68,0:01:47.28,Default,,0000,0000,0000,,And write them down \Nand put them in our risk register
Dialogue: 0,0:01:47.55,0:01:50.06,Default,,0000,0000,0000,,and decide to do something about them.
Dialogue: 0,0:01:50.48,0:01:56.36,Default,,0000,0000,0000,,Clearly 'risk' is a subset\Nof uncertainties, but which subset?
Dialogue: 0,0:01:56.94,0:01:58.13,Default,,0000,0000,0000,,How do you know?
Dialogue: 0,0:01:58.80,0:02:02.95,Default,,0000,0000,0000,,I think it's very simple to separate\Nrisk and uncertainty.
Dialogue: 0,0:02:03.20,0:02:05.27,Default,,0000,0000,0000,,And I used 3 English words,
Dialogue: 0,0:02:05.42,0:02:10.02,Default,,0000,0000,0000,,these words here,\N'risk is uncertainty that matters."
Dialogue: 0,0:02:11.50,0:02:14.78,Default,,0000,0000,0000,,Because most of the\Nuncertainties in the world don't matter.
Dialogue: 0,0:02:15.56,0:02:19.01,Default,,0000,0000,0000,,We don't care if it's going to rain\Nin London tomorrow afternoon.
Dialogue: 0,0:02:19.40,0:02:23.78,Default,,0000,0000,0000,,It might, it might not,\Nit's irrelevant, it doesn't matter.
Dialogue: 0,0:02:24.50,0:02:26.95,Default,,0000,0000,0000,,We don't care what the \Nexchange rate will be
Dialogue: 0,0:02:26.95,0:02:30.70,Default,,0000,0000,0000,,if it's between the Russian Ruble \Nand the Chinese Yen in 2020.
Dialogue: 0,0:02:30.70,0:02:32.39,Default,,0000,0000,0000,,It doesn't matter to us.
Dialogue: 0,0:02:32.89,0:02:35.12,Default,,0000,0000,0000,,But there are things on our projects,
Dialogue: 0,0:02:35.43,0:02:37.12,Default,,0000,0000,0000,,and things in our families,
Dialogue: 0,0:02:37.27,0:02:38.87,Default,,0000,0000,0000,,and things in our country,
Dialogue: 0,0:02:38.98,0:02:41.45,Default,,0000,0000,0000,,which are uncertain which do matter to us.
Dialogue: 0,0:02:42.20,0:02:45.34,Default,,0000,0000,0000,,If it's an uncertainty that matters, \Nit's a risk.
Dialogue: 0,0:02:46.19,0:02:49.99,Default,,0000,0000,0000,,So here's another question,\Nhow do you know what matters?
Dialogue: 0,0:02:50.75,0:02:53.40,Default,,0000,0000,0000,,In your projects, \Nwhat are the things that matter?
Dialogue: 0,0:02:54.08,0:02:57.88,Default,,0000,0000,0000,,The things that matter in our projects\Nare our objectives.
Dialogue: 0,0:02:58.53,0:03:02.22,Default,,0000,0000,0000,,So we must always connect uncertainty\Nwith objectives,
Dialogue: 0,0:03:02.99,0:03:05.63,Default,,0000,0000,0000,,in order to find the risks.
Dialogue: 0,0:03:06.00,0:03:08.36,Default,,0000,0000,0000,,And if we look at \Nsome definitions of risk,
Dialogue: 0,0:03:08.36,0:03:11.40,Default,,0000,0000,0000,,this is the ISO standard that I mentioned,
Dialogue: 0,0:03:11.44,0:03:13.80,Default,,0000,0000,0000,,it connects those words very simply.
Dialogue: 0,0:03:13.80,0:03:17.56,Default,,0000,0000,0000,,Risk is the effect of uncertainty\Non objectives.
Dialogue: 0,0:03:18.45,0:03:21.20,Default,,0000,0000,0000,,And we might look at another definition\Nfrom the UK,
Dialogue: 0,0:03:21.39,0:03:23.92,Default,,0000,0000,0000,,from our association \Nwith project management,
Dialogue: 0,0:03:24.14,0:03:28.13,Default,,0000,0000,0000,,it says the same thing that risk\Nis an uncertain event
Dialogue: 0,0:03:28.15,0:03:32.21,Default,,0000,0000,0000,,or a set of circumstances, \Nwhich is uncertain,
Dialogue: 0,0:03:32.21,0:03:35.37,Default,,0000,0000,0000,,but it matters because should it occur,
Dialogue: 0,0:03:35.37,0:03:38.59,Default,,0000,0000,0000,,it will have an effect on achievement of objectives.
Dialogue: 0,0:03:38.60,0:03:40.55,Default,,0000,0000,0000,,Uncertainty that matters.
Dialogue: 0,0:03:40.87,0:03:44.32,Default,,0000,0000,0000,,So we should be looking \Nin our risk register for two things.
Dialogue: 0,0:03:44.70,0:03:48.80,Default,,0000,0000,0000,,Is it uncertain? We don't want \Nproblems in our risk register.
Dialogue: 0,0:03:49.18,0:03:52.11,Default,,0000,0000,0000,,We don't want issues in the risk register.
Dialogue: 0,0:03:52.11,0:03:55.02,Default,,0000,0000,0000,,We don't want constraints or requirements.
Dialogue: 0,0:03:55.29,0:03:59.63,Default,,0000,0000,0000,,These things are certain,\Nwhat we want are uncertainties,
Dialogue: 0,0:03:59.72,0:04:02.24,Default,,0000,0000,0000,,something that might happen\Nor might not happen.
Dialogue: 0,0:04:03.08,0:04:06.77,Default,,0000,0000,0000,,But the other important question for our\Nrisk register is
Dialogue: 0,0:04:06.77,0:04:08.37,Default,,0000,0000,0000,,does it matter?
Dialogue: 0,0:04:08.44,0:04:11.74,Default,,0000,0000,0000,,Which objective would be effective \Nif this thing happened?
Dialogue: 0,0:04:13.30,0:04:15.81,Default,,0000,0000,0000,,And then when we want to see\Nhow big the risk is,
Dialogue: 0,0:04:16.16,0:04:18.32,Default,,0000,0000,0000,,we can ask those two questions:
Dialogue: 0,0:04:18.34,0:04:19.77,Default,,0000,0000,0000,,how uncertain is it,
Dialogue: 0,0:04:19.98,0:04:22.10,Default,,0000,0000,0000,,and how much does it matter?
Dialogue: 0,0:04:22.13,0:04:24.50,Default,,0000,0000,0000,,And that will tell us how big the risk is.
Dialogue: 0,0:04:24.56,0:04:27.04,Default,,0000,0000,0000,,So, this idea of uncertainty that matters
Dialogue: 0,0:04:27.08,0:04:30.54,Default,,0000,0000,0000,,then develops into something which is useful
Dialogue: 0,0:04:30.62,0:04:33.32,Default,,0000,0000,0000,,by linking uncertainty to our objectives.
Dialogue: 0,0:04:34.77,0:04:37.15,Default,,0000,0000,0000,,So, we have two dimensions of ‘risk,’
Dialogue: 0,0:04:37.41,0:04:39.66,Default,,0000,0000,0000,,we have an uncertainty dimension and we
Dialogue: 0,0:04:39.66,0:04:42.09,Default,,0000,0000,0000,,have a dimension that \Naffects our objectives
Dialogue: 0,0:04:43.25,0:04:47.42,Default,,0000,0000,0000,,In projects, we call\Nthis probability and impact,
Dialogue: 0,0:04:47.45,0:04:49.50,Default,,0000,0000,0000,,We could call them other things,
Dialogue: 0,0:04:49.50,0:04:51.23,Default,,0000,0000,0000,,there are other English
Dialogue: 0,0:04:51.23,0:04:52.77,Default,,0000,0000,0000,,words we could use,\Nbut these
Dialogue: 0,0:04:52.77,0:04:54.55,Default,,0000,0000,0000,,are the ones,\Nmost often, we use.
Dialogue: 0,0:04:54.70,0:04:57.73,Default,,0000,0000,0000,,And I would like to ask you with \Nthis picture of the mouse.
Dialogue: 0,0:04:59.63,0:05:04.65,Default,,0000,0000,0000,,What effect matters to the mouse?
Dialogue: 0,0:05:05.87,0:05:09.32,Default,,0000,0000,0000,,So first of all, clearly, \Nhe is in a uncertain situation here.
Dialogue: 0,0:05:09.84,0:05:12.19,Default,,0000,0000,0000,,And he's seen some risks.
Dialogue: 0,0:05:12.46,0:05:15.36,Default,,0000,0000,0000,,His objective is to get the cheese\Nand stay alive.
Dialogue: 0,0:05:15.94,0:05:18.82,Default,,0000,0000,0000,,And so, one of the risks he has \Nidentified is a bad thing
Dialogue: 0,0:05:18.90,0:05:21.35,Default,,0000,0000,0000,,that might happen,\Nhe might be killed or injured.
Dialogue: 0,0:05:22.18,0:05:24.52,Default,,0000,0000,0000,,And so, he has been a \Ngood project manager,
Dialogue: 0,0:05:24.52,0:05:27.03,Default,,0000,0000,0000,,he has put his little helmet on, \Nand he is preparing
Dialogue: 0,0:05:27.15,0:05:32.05,Default,,0000,0000,0000,,so that it doesn't happen to him.\NSo, he doesn't get killed or injured.
Dialogue: 0,0:05:32.05,0:05:32.82,Default,,0000,0000,0000,,Very good.
Dialogue: 0,0:05:33.69,0:05:36.56,Default,,0000,0000,0000,,And there are things in our projects, \Nthat if they happened
Dialogue: 0,0:05:36.56,0:05:37.88,Default,,0000,0000,0000,,would kill or injure us.
Dialogue: 0,0:05:37.88,0:05:39.22,Default,,0000,0000,0000,,They would waste time,
Dialogue: 0,0:05:39.22,0:05:41.57,Default,,0000,0000,0000,,waste money, damage reputation,
Dialogue: 0,0:05:41.57,0:05:42.99,Default,,0000,0000,0000,,destroy performance,
Dialogue: 0,0:05:43.20,0:05:45.73,Default,,0000,0000,0000,,maybe even injure real people.
Dialogue: 0,0:05:46.23,0:05:49.88,Default,,0000,0000,0000,,And as project managers we have to\Nsee those things and stop them happening.
Dialogue: 0,0:05:49.96,0:05:51.79,Default,,0000,0000,0000,,Protect ourselves in advance.
Dialogue: 0,0:05:51.86,0:05:52.87,Default,,0000,0000,0000,,Avoid them.
Dialogue: 0,0:05:54.24,0:05:57.87,Default,,0000,0000,0000,,Are there any other uncertainties\Nthat matter for the mouse?
Dialogue: 0,0:05:59.64,0:06:01.33,Default,,0000,0000,0000,,Well there is...
Dialogue: 0,0:06:01.33,0:06:02.28,Default,,0000,0000,0000,,the cheese.
Dialogue: 0,0:06:02.68,0:06:05.56,Default,,0000,0000,0000,,There's an uncertainty here which \Nmatters a great deal.
Dialogue: 0,0:06:05.56,0:06:07.89,Default,,0000,0000,0000,,Will I get the cheese out of the trap?
Dialogue: 0,0:06:08.73,0:06:10.43,Default,,0000,0000,0000,,He might, or he might not.
Dialogue: 0,0:06:10.97,0:06:14.12,Default,,0000,0000,0000,,And if he doesn't get the \Ncheese out of the trap, he's failed
Dialogue: 0,0:06:14.96,0:06:17.47,Default,,0000,0000,0000,,So he has two uncertainties to manage,
Dialogue: 0,0:06:17.47,0:06:20.13,Default,,0000,0000,0000,,one of them is bad - he might be killed\Nor injured -
Dialogue: 0,0:06:20.42,0:06:22.64,Default,,0000,0000,0000,,the other is good - he might \Nget the cheese.
Dialogue: 0,0:06:23.13,0:06:24.62,Default,,0000,0000,0000,,And what he has to do,
Dialogue: 0,0:06:24.97,0:06:28.96,Default,,0000,0000,0000,,what he has to do is to manage both\Nof these at the same time.
Dialogue: 0,0:06:29.23,0:06:32.16,Default,,0000,0000,0000,,And as project managers, we have to\Ndo the same thing.
Dialogue: 0,0:06:32.79,0:06:36.13,Default,,0000,0000,0000,,And also we have to do it in the\Nbest possible way -
Dialogue: 0,0:06:36.13,0:06:40.55,Default,,0000,0000,0000,,sometimes there's a better way to get the \Ncheese without being killed or injured.
Dialogue: 0,0:06:41.43,0:06:44.52,Default,,0000,0000,0000,,In our projects we have to stop the \Nbad things happening,
Dialogue: 0,0:06:44.89,0:06:47.79,Default,,0000,0000,0000,,but we also have to get the cheese out\Nof our projects.
Dialogue: 0,0:06:49.12,0:06:52.12,Default,,0000,0000,0000,,So what does 'cheese' mean,\Nin your project?
Dialogue: 0,0:06:52.12,0:06:54.30,Default,,0000,0000,0000,,What is the 'cheese' in your project?
Dialogue: 0,0:06:55.16,0:06:56.64,Default,,0000,0000,0000,,'Cheese' means value.
Dialogue: 0,0:06:56.81,0:06:58.44,Default,,0000,0000,0000,,'Cheese' means benefits.
Dialogue: 0,0:06:58.64,0:07:01.87,Default,,0000,0000,0000,,'Cheese' means products and \Nservices that people want and need.
Dialogue: 0,0:07:02.17,0:07:04.29,Default,,0000,0000,0000,,'Cheese' means customer satisfaction.
Dialogue: 0,0:07:04.49,0:07:08.69,Default,,0000,0000,0000,,'Cheese' is the good stuff that we're \Ntrying to get out of our difficult projects.
Dialogue: 0,0:07:08.87,0:07:11.96,Default,,0000,0000,0000,,And if we don't do anything bad -
Dialogue: 0,0:07:11.96,0:07:16.17,Default,,0000,0000,0000,,we don't waste time, we don't \Nwaste money, we don't damage reputation -
Dialogue: 0,0:07:16.17,0:07:17.95,Default,,0000,0000,0000,,but we don't create value,
Dialogue: 0,0:07:18.28,0:07:19.34,Default,,0000,0000,0000,,we've failed.
Dialogue: 0,0:07:19.68,0:07:23.18,Default,,0000,0000,0000,,If the mouse didn't die but he didn't \Nget the cheese, he failed.
Dialogue: 0,0:07:23.95,0:07:28.35,Default,,0000,0000,0000,,If we create benefits, but we waste time \Nand waste money and destroy reputation,
Dialogue: 0,0:07:28.35,0:07:29.37,Default,,0000,0000,0000,,we've failed.
Dialogue: 0,0:07:30.02,0:07:32.56,Default,,0000,0000,0000,,And if the mouse gets the cheese\Nand he's killed,
Dialogue: 0,0:07:32.72,0:07:33.78,Default,,0000,0000,0000,,he's failed.
Dialogue: 0,0:07:33.78,0:07:36.08,Default,,0000,0000,0000,,So we have to do both of these things.
Dialogue: 0,0:07:36.35,0:07:39.23,Default,,0000,0000,0000,,And when we think about risk \Nand think about impact,
Dialogue: 0,0:07:39.47,0:07:41.90,Default,,0000,0000,0000,,there are two kinds of impact that matter.
Dialogue: 0,0:07:42.52,0:07:45.18,Default,,0000,0000,0000,,Bad ones, and good ones.
Dialogue: 0,0:07:45.49,0:07:48.12,Default,,0000,0000,0000,,Uncertainties that could hurt the project,
Dialogue: 0,0:07:48.68,0:07:51.57,Default,,0000,0000,0000,,and uncertainties that \Ncould help the project.
Dialogue: 0,0:07:51.77,0:07:56.36,Default,,0000,0000,0000,,Both of these matter \Nand both of these need to be managed.
Dialogue: 0,0:07:56.87,0:07:59.08,Default,,0000,0000,0000,,And we have another word for those.
Dialogue: 0,0:07:59.30,0:08:03.79,Default,,0000,0000,0000,,So, here's the definition of risk from the\NProject Management Institute, the PMI,
Dialogue: 0,0:08:04.01,0:08:05.68,Default,,0000,0000,0000,,from the PMBok Guide.
Dialogue: 0,0:08:05.99,0:08:08.09,Default,,0000,0000,0000,,It's the same as the others \Nthat we've seen:
Dialogue: 0,0:08:08.09,0:08:12.38,Default,,0000,0000,0000,,an uncertain event or condition, \Nthat if it occurs, affects an objective.
Dialogue: 0,0:08:13.22,0:08:18.53,Default,,0000,0000,0000,,But PMI knows about the mouse. PMI knows \Nabout the cheese and the traps,
Dialogue: 0,0:08:18.72,0:08:22.28,Default,,0000,0000,0000,,and has added three words \Nto the definition of risk here.
Dialogue: 0,0:08:23.23,0:08:26.20,Default,,0000,0000,0000,,It's not the words 'cheese' and 'traps'.
Dialogue: 0,0:08:26.43,0:08:29.30,Default,,0000,0000,0000,,It's the words 'positive or negative'.
Dialogue: 0,0:08:30.07,0:08:33.98,Default,,0000,0000,0000,,What this tells us is that there \Nare good risks, as well as bad risks.
Dialogue: 0,0:08:34.54,0:08:37.100,Default,,0000,0000,0000,,And we heard that in one of our \Nkeynote speeches, earlier this morning.
Dialogue: 0,0:08:38.51,0:08:42.91,Default,,0000,0000,0000,,In the uncertain situation that this \Ncountry faces going forward
Dialogue: 0,0:08:42.96,0:08:46.06,Default,,0000,0000,0000,,with all the changes that their have been,\Nthere are threats.
Dialogue: 0,0:08:46.06,0:08:48.06,Default,,0000,0000,0000,,There are things that could go wrong.
Dialogue: 0,0:08:48.06,0:08:50.23,Default,,0000,0000,0000,,And you need to see those\Nand address them.
Dialogue: 0,0:08:50.41,0:08:53.19,Default,,0000,0000,0000,,But there are also opportunities.
Dialogue: 0,0:08:53.25,0:08:56.24,Default,,0000,0000,0000,,Uncertain things that might happen\Nthat could be good.
Dialogue: 0,0:08:56.92,0:08:59.35,Default,,0000,0000,0000,,And we also need to see those things,
Dialogue: 0,0:08:59.56,0:09:02.70,Default,,0000,0000,0000,,and to try and proactively \Nmake them happen.
Dialogue: 0,0:09:03.25,0:09:05.38,Default,,0000,0000,0000,,And that is equally true in our projects,
Dialogue: 0,0:09:05.38,0:09:06.94,Default,,0000,0000,0000,,in our personal lives,
Dialogue: 0,0:09:06.94,0:09:09.31,Default,,0000,0000,0000,,and also at the national level.
Dialogue: 0,0:09:09.78,0:09:13.58,Default,,0000,0000,0000,,And I'll be talking about some of \Nthose things later on this afternoon
Dialogue: 0,0:09:14.72,0:09:19.16,Default,,0000,0000,0000,,So, PMI has this definition. The other \Nstandards have something very similar.
Dialogue: 0,0:09:19.54,0:09:21.45,Default,,0000,0000,0000,,The iso standard, at the bottom here,
Dialogue: 0,0:09:21.45,0:09:25.62,Default,,0000,0000,0000,,says 'risk is the effect of\Nuncertainty on objectives.'
Dialogue: 0,0:09:26.54,0:09:29.25,Default,,0000,0000,0000,,Note, the effect can be \Npositive or negative.
Dialogue: 0,0:09:31.01,0:09:34.73,Default,,0000,0000,0000,,And the APM Association, for project \Nmanagement in the UK says the same thing.
Dialogue: 0,0:09:35.43,0:09:39.95,Default,,0000,0000,0000,,So we have this new idea,\Nthat risk is a double-sided concept.
Dialogue: 0,0:09:41.09,0:09:43.96,Default,,0000,0000,0000,,And it's the same impression,\Nthe word you have for risk,
Dialogue: 0,0:09:44.33,0:09:48.00,Default,,0000,0000,0000,,we mostly think of bad things.\NBut it could be used for good things,
Dialogue: 0,0:09:48.00,0:09:49.88,Default,,0000,0000,0000,,as well. Isn't that right?
Dialogue: 0,0:09:50.14,0:09:51.86,Default,,0000,0000,0000,,It's an uncertain word.