Increasing Risk Management Prowess As much art as science

1. Quality Revolution … Evolution Increasing Risk ManagementProwess As much art as science Session B10 Paul Armstrong, PE, LSSBB, CMQ/OE Paul.Armstrong@eNthusaProve.com 412-401-7057

2. Objectives • See the brilliance of the expert’s perspective of “management” • Balance the science of risk analysis with the art of risk intuition • Adopt a fresh attitude when improving risk management in project and operations management • Use risk management as a team learning opportunity In other words… increase our… Prowess: skill or expertise in a particular activity or field; bravery in battle. Session B10

3. Agenda Quick Overview of Risk Management Basics Struggles with Risk Management in Real Life Struggles due to “Managing Risk” Struggles because of Tool Addiction PROWESS The Expert’s Insight ! Ideas for improving prediction intuition Risk Prediction The tacit knowledge, intuitive first step Some collateral benefits!! Session B10

4. The Basic Components RISK Probability Likelihood Severity Consequence Session B10

5. The Dynamic Aspect of Severity Session B10

6. The Basic Process Session B10

7. Tool Intoxication Why our inner geek relishes Risk Management • Databases • Matrices • Risk Breakdown Structures • Statistics Notice that these focus on everything EXCEPT identifying risk. Session B10

8. Risk Misunderstood • Real examples of “Risks” heard from industrial project teams • Weather • Holidays • People not knowing their job • Not enough money • Not enough time • The red herring of Drastic Consequences • Monsters under the bed Risks present a problem, BUT Don’t Confuse Problems with Risks Session B10

9. What Would the Expert Say? Management is Prediction Which of these is NOT a prediction: Consequence Likelihood Detectability Is Prediction an Art or a Science? Session B10

10. Prediction “…arts and sciences are branches of the same tree. All these aspirations are directed toward ennobling man's life, lifting it from the sphere of mere physical existence and leading the individual towards freedom.” Session B10

11. Risk Prediction The Science The Art Inferential Statistics Descriptive Statistics Probability Likelihood Severity Consequence Historical Data Future ≠Past Proven Periodicity most important figures for management …are unknown and unknowable. Experience In God we Trust…all others bring data Session B10

12. Risk Prediction Explicit Knowledge Tacit Knowledge Tools Creativity Probability Likelihood Severity Consequence Analytical Methods Intuition “What is, What was” “What could be, what might be” How do you improve Session B10

13. Improving Tacit Knowledge Session B10

14. Improving Intuition How does our brain develop intuition? Lot of repetitions Lots of experimentation Salami slice sampling It’s naturally programmed into us…it’s called play. Session B10

15. Ok…how do we “play”? • Scenario testing • Develop life like scenarios and let folks play them out. • Have them observe their thinking and their conversation • Scrimmaging • Execute the situation first for practice…then do the the game films. This requires a safe space. • Use actual games • Resource planning games develop our skills to see a system, balance trade-offs and evaluate our risk prediction prowess. Session B10

16. Team Learning Risk Prediction opens the door for Team Learning…how? • Suspends Assumptions • Gets the conversation focused on the future • Allows for prioritizing topics Provides a path for improving the team’s TACIT knowledge…scrimmaging and simulating via deep dialogues. Session B10

17. Summary Keep in mind… Management is Prediction, Prediction is Art and Science Put as much energy in improving your prowess in the ART of Risk Management as in the science. • Improve your tacit risk prediction prowess as you’re naturally programmed to… via simulation and scrimmaging…ok, play. • Use Risk Prediction and Management as a way to improve true Team Prowess… it’s naturally forward focused and tests what we believe vice what we know as an organization. Session B10