Why Opportunity in projects should never be called ‘Risk’!

There has crept into the project management worlds on both sides of the pond in recent times, (although PMBoK®  from PMI has recently reversed this – see footnote), the practice of classifying  opportunity as ‘risk’ and trying to manage them via a single process.  This bothers me, quite a lot and here’s why.

1. Project Risk management is an important and poorly practiced element of project management.
2. Many educated people involved in projects in large scale business have a poor understanding of the management of project risk today, and that includes far too many ‘project managers’.  We have stacks of evidence to back this up, from many different countries.
3. One of the reasons it is poorly practiced is that it is not well understood – this issue is worsened by the fact that there are quite a few subtleties to this topic, which successful practitioners must be aware of, and not many are.
4. So, now we also have the situation where ‘opportunities’ are also classified as risk.  It is also recommended by some that we manage them together via a single process. This confuses people, even further, when we are already dealing with a poorly understood practice.

And this is the key:

5. The common human interpretation and use of the term ‘risk’ in everyday life always revolves around ‘chance of danger’, or ‘chance of loss’.  Fits perfectly with the original use of the term risk in relation to the management of projects.  ‘Loss’ and ‘danger’ in this context are never positive outcomes. “Chance of” implies uncertainty, and that’s another way to describe some of what we manage when we (properly) manage project risk.
6. Opportunities, where they exist, do not carry danger; they should all carry positive ‘benefits’ to the project, or the end product, or both.  In addition, they do not have to exhibit uncertainty either, so they miss both tests completely when we look for and correctly discuss ‘risk’. Think of it this way:  would we ever say: “if I walk along the cliff top on a foggy day, there is an opportunity I might fall off’?
7. Lastly, it would likely be un-productive in most businesses to try and run a  session that looked at both risk and opportunity together.  It could lead to a very unfocused session. Our advice would be to look at them separately.

And this is even more key:

8. In real life and business, not just in textbooks, when we engage in risk assessments,  we often have to engage with people who have never done this before and may even never do it again. Such counter-intuitive language is very unhelpful.  It can even harm the process, considerably.

Communication (even when we all share a common language) is one of the most challenging things on projects, and communication issues can be a huge source of problems.  Why would we want to make this task tougher than it needs to be?  It makes no sense. By all means discuss and manage risks and opportunities of course, but call them that – risks, and opportunities.  They are not the same at any level.

Footnote – PMBoK backing-out of the Trend: The PMI’s PMBoK® Edition 5, in 2013 published the following note in relation to its updates on project risk management, in Section  X1.19 Section 11:

• “changes were made to move the emphasis away from the use of the term “positive risk” toward “opportunity” in line with feedback from the Project Management community”.

source: Pmis