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Okay, let's have a look at
risk management in practice

2
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And what I want to do
is to start with some basic concepts

3
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then focus on two difficult areas
in the risk process

4
00:00:14,242 --> 00:00:19,164
So, I guess if I asked you
to define the word 'risk'

5
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you would have some ideas
of what it meant

6
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We might not have a formal definition
that we could quote,

7
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but we all have something in our minds
when we hear the word 'risk'

8
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This is what we think,
and maybe you think of things like this

9
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Maybe you feel like this little guy,
facing some big ugly challenge

10
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that you know is just going to
squash you flat.

11
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Maybe you feel like this guy.

12
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This is a real job in North Korea,

13
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and his job is to hold the target
for other people to shoot at

14
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Sometimes project managers
have the target here

15
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We feel like everybody is shooting at us
in our job

16
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Or maybe you just know there's something
nasty out there, waiting to get you

17
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And maybe that's what you think of
when you think of the word 'risk'

18
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Well that's partly true
but it's not the whole truth.

19
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Risk is not the same
as uncertainty.

20
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Risk is related to uncertainty
but they're different.

21
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So all risks are uncertain
but not all uncertainties are risks.

22
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If you have a risk register
or a risk list,

23
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you don't have a million items in it,
or you shouldn't.

24
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You don't even probably have
a thousand items in it,

25
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you have a smaller number.

26
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Although there are millions
of uncertainties in the world.

27
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So how do we decide which uncertainties
we're going to call 'risk'?

28
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And write them down 
and put them in our risk register

29
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and decide to do something about them.

30
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Clearly 'risk' is a subset
of uncertainties, but which subset?

31
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How do you know?

32
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I think it's very simple to separate
risk and uncertainty.

33
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And I used 3 English words,

34
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these words here,
'risk is uncertainty that matters."

35
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Because most of the
uncertainties in the world don't matter.

36
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We don't care if it's going to rain
in London tomorrow afternoon.

37
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It might, it might not,
it's irrelevant, it doesn't matter.

38
00:02:24,498 --> 00:02:26,948
We don't care what the 
exchange rate will be

39
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if it's between the Russian Ruble 
and the Chinese Yen in 2020.

40
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It doesn't matter to us.

41
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But there are things on our projects,

42
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and things in our families,

43
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and things in our country,

44
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which are uncertain which do matter to us.

45
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If it's an uncertainty that matters, 
it's a risk.

46
00:02:46,188 --> 00:02:49,991
So here's another question,
how do you know what matters?

47
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In your projects, 
what are the things that matter?

48
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The things that matter in our projects
are our objectives.