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Published on Thursday, January 26, 2006 - 11:53 AM
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A common definition of risk is “Any uncertainty which, if it occurs, will have an effect on achievement of one or more objectives.� This generic definition allows us to apply risk management to a broad range of activities, wherever we can define distinct objectives. This includes personal risk management, identifying and managing uncertainties that could affect achievement of our personal objectives. As with any other application area, personal risk management can be applied at different levels of detail. The key lies in how well we are able to specify our personal objectives. At the highest level we might say that our aim is to be “happy, healthy, wealthy and wise�, and we can identify and manage strategic personal risks which might affect these broad goals. This might require us to address big issues such as our key personal relationships, diet and exercise regime, or investment and pension policies.
Or we might identify more specific personal objectives such as “Reduce my weight by 20 pounds by the end of June�, or “Learn to speak a foreign language fluently before my summer holidays�, or “Obtain promotion within 12 months.� For each of these specific objectives we can then apply the risk management process to help us reach them.
The process is exactly the same as any other application of risk management. After defining objectives, the next step is to identify risks, including both threats which could hinder us as well as opportunities which could help us. For a career development objective for example, downside risks might include the following: I might be assigned to a new job which absorbs all my time and energy; I might invest in training which does not provide the required new skills or knowledge; I might set unrealistic expectations and give up. On the upside, a new opening may arise at work or elsewhere; I might be able to use completely different skills to move into a new area; I might meet someone who offers me my ideal next job.
After risk identification comes assessment, estimating the probability and impact of each identified risk to prioritise them for further action. Simple “high/medium/low� scales can be used for this, enabling the worst threats and best opportunities to be found.
This needs to be followed by response development, finding appropriate and effective actions to minimise threats and maximise opportunities. Some of these might be simple (talk to my boss or colleagues about possible internal openings; research available training courses), and others may require more effort and investment (obtain coaching to explore my deep-seated personal goals; join professional association to improve networking).
Finally, identified responses need to be implemented, and their effect should be monitored, to see whether they are moving us towards our objective. Where necessary, we should develop new responses, remaining alert to the possibility of secondary risks. And our risk assessment should be updated regularly to find and respond to new threats and opportunities.
Entering a new year might be a good time to do some personal risk management, reviewing where we are currently in relation to where we want to be, and developing strategies and actions to change where necessary. Risk management is not just for work or business – it can help us achieve our personal objectives as well. Try applying the risk process to your personal life and see what a difference it can make!
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Dr. David Hillson (PMP, FAPM, FIRM, MCMI) is an international risk management consultant, and Director of Risk Doctor & Partners ( www.risk-doctor.com ). His speciality is risk technology transfer, assisting organisations to develop in-house risk processes, and he is a popular conference speaker and author on risk, winning several awards for his papers. He is recognised internationally as a leading thinker and practitioner in risk management, and his recent emphasis has been the inclusion of proactive opportunity management within the risk process, which is the topic of his latest book "Effective opportunity management : Exploiting positive risk", published in 2003 by Dekker of New York.
David is an active member of the global Project Management Institute (PMI) and was a founder member of its Risk Management Specific Interest Group. He received the 2002 PMI Distinguished Contribution Award for his work in developing risk management over many years. He is a Fellow of the UK Association for Project Management (APM) and a Fellow of the UK Institute of Risk Management (IRM), as well as being a member of the Chartered Management Institute.
To provide feedback on this Briefing Note, or for more details on how to develop effective risk management, contact the Risk Doctor (info@risk-doctor.com), or visit the Risk Doctor website (www.risk-doctor.com).
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