"Managing risk in practice" workshop

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

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

then focus on two difficult areas
in the risk process

So, I guess if I asked you
to define the word 'risk'

you would have some ideas
of what it meant

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

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

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

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

that you know is just going to
squash you flat.

Maybe you feel like this guy.

This is a real job in North Korea,

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

Sometimes project managers
have the target here

We feel like everybody is shooting at us
in our job

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

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

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

Risk is not the same
as uncertainty.

Risk is related to uncertainty
but they're different.

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

If you have a risk register
or a risk list,

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

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

you have a smaller number.

Although there are millions
of uncertainties in the world.

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

And write them down
and put them in our risk register

and decide to do something about them.

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

How do you know?

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

And I used 3 English words,

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

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

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

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

We don't care what the
exchange rate will be

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

It doesn't matter to us.

But there are things on our projects,

and things in our families,

and things in our country,

which are uncertain which do matter to us.

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

So here's another question,
how do you know what matters?

In your projects,
what are the things that matter?

The things that matter in our projects
are our objectives.