Risk management, while consistently done on projects, is rarely done broadly enough to encompass all of the risks to value delivery. Indeed, value protection is rarely even considered, let alone the primary consideration.
Value delivery management requires risk management to be focused on the protection of the project's value (not just the protection of the project). This involves managing the following risks:
- To the delivery of the project (to create the opportunity for value).
- To the delivery of the benefits and value (to ensure the realization of value).
- To the organization during and after the project (to prevent the loss of value).
- To the organization's corporate profile (to avoid potential future loss of value).
On the other hand, too much risk management can be costly, devaluing your project on the cost side. Risk management action should be focused, appropriate, and effective. It should target the risks worth dealing with, track the project's progressive reduction in its risk profile and, at all times, protect the realizable value of the project.
This requires more than standard project risk management — it requires value-risk management.
Every risk should be seen and managed as a potential threat to your project's value.
This requires an improvement in most risk management approaches.
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Click here for the tenth article in this the series "Refocusing Projects Onto Business Value, Part 10: Financial Management"
Click here for the first article in this the series "Refocusing Projects onto Business Value, Part I: The Need".
Jed Simms is CIO magazine's weekly project management columnist. Simms, founder of projects and benefits delivery research firm Capability Management, is also the developer of specialized project management and project governance Web site www.project-sponsor.com
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