The best of Risk Abatement Plans (RAP) cannot guarantee risks will not somehow find the means to become real issues. But there are two things thoughtful RAPs can do.
- Cause you to stop if enough risks do turn into issues in spite of your risk abatement actions, and
- Have ready-to-go Contingency Plans (“plan B, plan C, etc.) to take you forward if that still makes sense.
An appropriate metaphor of unexpected circumstances is Honduras’s Choluteca Bridge which many have used to epitomize uncertainty even when you have prepared for what you thought was the worst-case scenario. COVID-19 has created extensive circumstances beyond what businesses could have anticipated. Even the best Business Continuity Plan (BCP) is not highly effective when the entire world is affected. So how can your business mitigate the effects of such a devastating crisis beyond the usual insurance coverage, BCP, and the “Force Majeure” wild card?
Most projects plans and vendor proposals contain a section on risks that define a list of risks, maybe some measure of the risks, and less likely include some thought on how to be proactive in managing the risks. None I have reviewed actually define and schedule actions to prevent or mitigate the risks.
Just as developing and executing your project plan with the forethought and discipline needed to increase your odds of success, you need an RAP based on the same forethought and execution discipline. It’s not quite the same as what Mark Johnson talks about in his latest book LEAD FROM THE FUTURE. Leading from the future is about reinventing your business model to anticipate what the market demand and consumer behavior (among other things) may look like in five to ten years. Risk abatement planning starts with a predefined destination that aligns with an existing business model and defines actions that can avert risks from becoming issues along the way to that destination. There are two components of a RAP; abatement actions and contingencies.
Abatement actions are the predefined actions you will take, at a predefined date, if a certain situation occurs. Deciding to buy a real spare for your vehicle that relies on run-flat tires before you embark on a cross-country trip is an abatement action that is taken before you leave. Investing in a gallon of antifreeze, AAA road protection, and a mobile phone solar charger may also help to mitigate possible issues. But just how much do you want to invest upfront when risks vary greatly both in term of the likelihood they will occur, and their effect? There is a better way to reduce your spend while actually increasing your protection and likelihood of success. Here is a brief on how to develop an effective RAP. (If you want more detail schedule a call with us so we can learn more about your business and help you develop a detailed RAP.)
To keep it simple we consider a project that already has a detailed project plan, budget, and schedule.
- List every deliverable of your project plan and the date it is to be delivered.
- For each deliverable list all of the risks you can think of that could negatively affect the outcome.
- For each of these risks decide on a scale of 1-5 (1 low, 5 high) the:
- Probability of Occurrence (PoO -how likely you believe this could actual happen), and
- The Effect of Occurrence (EoO – the effect/damage)
- Then think of all the possible abatement actions you could take to fully interrupt, or at least reduce the likelihood the risk will turn into a full-blown issue and the effect it may have.
- Then decide at which date each action would need to be executed at its highest potential for positive effect.
- Considering all abatement actions for each individual risk, decide the potential they have to reduce the PoO and the EoO, using the same scale from 1-5 showing a new PoO and EoO if they abatement actions are executed on the stated dates. For example if planning for your wedding has a risk of rain as a PoO of 4, and a EoO of 5, renting a tent once you know the weather forecast 1 week ahead of the wedding may create the same (or worse) PoO, but reduce the EoO from a 5 to a 2 or even 1.
- Then determine the cost to execute every abatement action.
- Lastly, develop Contingencies Actions for every risk. Contingencies give you a “plan B” if in spite of executing your abatement actions the risk still becomes a real issue. Add cost and schedule needed to execute each of the contingency actions.
Now you have the ingredients to spice up your project plan to significantly increase your odds of success. Just consider the extreme case where an abatement action is to “kill the project”. Ever heard of “fail fast” and how it mitigates failure in terms of minimizing loss of time and money?
After you align the dates between your project plan and your RAP, and adjust your budget for RAP actions and contingencies, you should be able to sleep a little better at night.
That was a simple “project” example. A worldwide pandemic, or even a hurricane on your continent take this to an entirely new level. But a good RAP can be done to provide some level of help even in these circumstances.
(To see a picture of the Choluteca Bridge after hurricane Mitch check out this article: The River Is Moving)