Risk handling in Program Management

Risk is the natural ingredient when implementing change. A risk is an uncertain event of condition that, if it occurs, has a positive or negative effect on program objectives. When the effect is positive, we usually call it opportunity, - to be more understandable for other stakeholders - it is accelerating the implementation and realization of our programs. When the risk is negative we often referred to as threats, affect the implementation of a program and realization of benefits.

Programs are inherently complex in nature, due to groups of related components and their interactions with one another. Program complexity includes technical and sociopolitical factors, schedule and cost constraints, and the broader environment in which the program managed.

Consequently, it is vital to proactively manage program risks throughout the program life cycle in order to achieve benefits that are aligned with strategic objectives and build and implement risk response plans across diverse program components.

1. Ensure the program risk threshold is aligned with the org.'s risk appetite

2. Identify and evaluate risk throughout the program life cycle

3. Implement the practical use of benchmarking

4. Effectively manage the component dependencies of the program

5. Address risks related to business viability throughout the program continuously

Programs are executed to achieve benefits and organizational strategic objectives. An effective risk management strategy is essential to ensuring a program aligns with the broader organizational strategy. Thus, program risk thresholds should consider organizational risk appetite, which is an assessment of an organization's willingness to accept and deal with risks.

Risk identification and analysis is an ongoing effort throughout the program life cycle. This process should address two main factors:

• Risks that may be encountered during the life cycle of the program and their impact on achieving the program objectives within traditional time and cost perspectives

• Risks that may affect the realization of benefits during program implementation and after program transition.

During risk identification and analysis, it is important to guard against optimistic bias, which is a subset of rational correctness. This bias is the tendency to forecast future events in an optimistic or positive way. In program planning, this bias neglects to identify and evaluate risks in a structured way. Planners should recognize the most project experience delays and cost overruns are common. Optimistic bias can be lessened by benchmarking against risks observed in prior programs and will provide realistic expectations.

For a program to be successful, it is crucial to manage its respective risks, their interdependencies within program components and their impact on overall achievement of program benefits. The program roadmap helps identify the program component interactions, and further program interface and integration reveal significant touchpoints. An early focus on dependencies and interfaces among components and their respective complexities is critical for program success. Risk assessment should address both human behavior and system behavior when considering complexities in programs and should align dependencies accordingly.

Programs are created to achieve benefits. Addressing risk early is necessary and proactive, keeping in mind that uncertainties always exist and will always appear during the program. Organizational risk appetite will guide the program governance approach to managing risk to achieve business viability. This risk management approach can be accomplished by managing strategic risk representation during the program and setting expectations by rebaselining the program approach and benefits achievement.

Program benefits realization is not limited to program implementation, meaning that program risk management activities should transfer identified risks - along with supporting analysis and response information - to the appropriate organizational risk register. This task may be managed by a different organizational group such as an EPMO or organizational program management office, rather than the one intended to realize the benefits.

The more early identification helps the more effective and efficient handling with risk responses.