Knowledge Management

Project Risk Management: How Reliable Is Old Data?

If it worked in the past, it should work now too. There is not necessarily any mathematical basis that this is an accurate assumption, but old results often inspire new successes. In a post for Mosaicproject’s Blog, Lynda Bourne elaborates on how this mindset translates in the world of risk management.

Factoring the Probability

Time and cost estimates both draw their calculations from past occurrences that are comparable in nature. Assessing risk events is all about being able to analyze the historical occurrences and adapt the lessons learned into things that are applicable in the present. There additionally needs to be an understanding about the reliability of the data being used.

When dealing with uncertainty, a different approach needs to be taken to risk management. For example, there is data regarding the weather, and an analysis regarding how heat creates blackouts. There is not, however, information about the impact of the blackout. With a situation such as this, extra efforts need to be placed in finding more data, as well as backing up what has already been found. These preventive actions cost time and money.

What is more difficult is the task of convincing stakeholders to invest. Many stakeholders refuse to believe there is a problem, or they do not want to sanction the use of their money on something seemingly invalid. However, there are some stakeholders who can see a problem and will be open to remedying the situation.

The greatest decision management has to make is deciding what they should do. Should they do nothing, or should they rationally think everything through? Maybe they should just dive head first and incur the risks. There is no single correct answer to this question. What management does need to do, no matter the approach, is have a conversation about anything that is unclear. What are the unforeseen consequences of choice “X”?

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