Talking about risk: interview with Wilhelm Kross (part 2)
Recently I spoke to risk expert Dr Wilhlem Kross about risk communication and the challenges facing project managers talking about risk. Here is the second part of that interview, in which Wilhelm and I talk about how project managers can best communicate about risk on their projects.
Wilhelm, you talked about how sometimes people communicating about risk provide the lowest level of information possible so that they don’t scare off stakeholders. How can project managers best get across the message of risk and at the same time be considered credible?
For project manages it is essential to recognize certain facts about risk communication. A transparent and unbiased process may be as important as results. The true level of residual risk (and management measures) must be openly and honestly communicated; the truth will come to the surface sooner or later.
Inconsistent and unsystematic approaches to risk analysis should be avoided. Risk communication is currently experiencing a fundamental change in mindset in that reactive reporting within stiff bureaucratic templates that nobody needs is being abandoned.
That sounds like a good change. What about other tools, like those for modelling? Can they help?
The inappropriate use of available tools like the use of short-term evaluation tools for long-term prognoses should be avoided because this will add to the level of distrust. Managerial biases need to be identified, and managed.
The guidance from the legal department, as and when it plays a role, needs to be balanced against the advantages and disadvantages in stakeholder risk perception which may be caused by an overly restrictive and unbalanced communication strategy.
Project managers need to be aware that stakeholders, and in particular the target audiences of risk related communication, may reflect a lack of skills, and a lack of formal education and training which may need to be compensated.
OK, so use tools to back up your arguments with caution. Can project managers avoid subjective assessments then?
No. Almost invariably, subjective assessments cannot be avoided which in turn calls for certain compensatory measures in order to address the respective levels of credibility and defensibility which are required to satisfy the needs of decision makers, and stakeholders.
This may trigger the need to incorporate multiple feedback loops and plan for iterations. And last but not least, the affordability of risk analysis and risk management approaches can be a sore issue in that cost-effectiveness may need to be addressed, and the ‘appropriate’ level of detail is often unclear when risk management analytics are first employed.
The project manager may need to answer the question about whether risk management action was worth the effort, and whether risk and opportunity management resulted in a tangible added value.
So what does a good risk communicator do?
Risk communicators focus on their target audiences, i.e. who needs to decide what in order to get them to where they want to go. Risk communicators make an effort to use the right vocabulary, frame the right context, and seek goal alignment with higher-level decision makers. They plan their risk communication strategically, and apply techniques from strategic marketing communication.
They employ intelligent risk communication as a personal career boost and opportunity enabler. They talk the decision makers’ language, get known to be good at it, establish their own brand and unique selling propositions. And if at all necessary, they get ready to grow beyond simply excelling in project management…
What tips do you have for project managers talking to stakeholders about risk?
The project manager should plan what she or he wants to do, and focus the communication specifically on the audiences which need to be addressed. Ideally, the project manager should first define her or his goal and objectives.
Then, identify and prioritize the various potential stakeholder audiences. It is imperative to develop a good understanding of explicit and informal communication networks, and decision making processes. Then, information should be gathered about targeted stakeholder audiences, and what drives their sentiments and their decisions.
Finally, select the communication channels and techniques for outreach. Messages should not simply be formulated, but tested before they are delivered at full scale. The project manager should broaden her or his base in the stakeholder community and ultimately establish dialogue with all relevant stakeholders.
You talked about the language we use not being that helpful in creating clarity, but surely you should take your words into account when talking to stakeholders?
Yes. Avoid technical and scientific
If at all possible, don’t engage in risk/benefit or risk/cost comparisons, or talk about money. Avoid negative allegations, words or phrases and be careful with comparisons. It is sensible not to make promises or deliver guarantees, and avoid speculation.
Try to behave like an ‘independent expert’. And ultimately, present a conclusion that is sufficiently clear and easy to understand, ideally limited to 2-3 key statements.
What about progress reporting? Any special considerations to take into account there?
Project progress communication is a typically reactive approach, responding to corporate policies. Project communication may encompass a combination of traffic lights (RAG), a list of risk factors, qualitative or (semi-)quantitative and in some cases a questionable form of risk aggregation.
Often, project progress reports do not include further comments and relatively few escalations given that it is expected that one will receive no feedback anyway.
I think most project managers will recognize that situation.
Usually, project progress communication is not strategically focused on influencing decision makers, so important questions remain unanswered such as:
- What do I as a project manager want to achieve by reporting on a specific risk factor?
Which additional responsibilities do I want to obtain? - Which responsibility can’t I accept, without simultaneously risking my job?
- How do I communicate best what needs to be done, without distractions?
- How do I need to package the messages in a way that the recipient truly understands, prioritizes and decides in my best interest?
By switching to a more proactive approach and reflecting the answers to such questions in project performance evaluation and progress reports, risk communication can become a true opportunity enabler.
Thanks, Wilhelm!
You can read the first half of this interview here.
About my interviewee: Dr. Wilhelm K. Kross, Dipl.-Ing., MBA, Eur. Ing., PMI-RMP is an internationally recognised expert in the fields of risk and project management and a partner of Plejades and the Amontis Consulting network. His main focuses are the fields of applied risk management and related in-depth risk analytics and valuation techniques, (mega-)project structuring and financing, as well as operational crisis and turnaround management, particularly in complex larger scale crisis programs and projects. Wilhelm spoke earlier this year at Project Zone Congress in Frankfurst on the subject of risk management and complexities of mega projects.
