Reflection on “Risk by the Numbers by Swanson, March 2012”

The article “Risk by the Numbers” is discussing risk, and some of popular tools that are being used to manage risk. As we know, risk is not always bad, and with great risk, most of the times, a great opportunity comes, and that is why companies need to balance the risk and reward of the projects out there.

The company needs to understand the nature of the risk, which will be reflected on the type of tools that will be used to analyze it. One of the famous methods used out there for complex projects is Monte Carlo analysis. Monte Carlo analysis involves determining of the impact for the identified risks through running simulations to identify the range of the possible outcomes for a number of scenarios. Decision Tree is another tool which is a diagramming technique that shows most of the possible outcomes of a particular decision; however, it is still considered to be not accurate. Another tool that is used is Sensitivity Analysis, which is basically a modeling technique that is used to help determine which risk have the most potential impact on a project; however, it is still considered to be limited, as in reality there are several variables changing at the same time.

The article discussed the Cross-rail project, which should be finished by 2018, but when I read more about it, I found that it got delayed to December 2019. in this project risk management was taken very seriously supported by a very strong risk management culture; the following steps were done; risk Identification, probability and impact quantification, risk level review, risk leveling, risk modeling, risk model reviews, model adjustment, and final acceptance.

Some of the learned lessons from this article is that organizations often ignore risk management, because there is a lack of organizational project management maturity. Another lesson is that tools may provide data and educated information; however, the final decision and responsibility belongs to the project manager.

When it comes to my personal experience, I come from a place that still lacks the maturity when it comes to dealing with risk management. Most of the project that we deal with in KSA and UAE is sponsored by the governments, and in these two countries, the government is trying to create an image through the very unique and outstanding architecture, and most of the projects have huge budgets, and in many projects these budgets extend massively, but if the sponsor does not have any problem with paying more, it is really hard to develop that maturity level in management; half of the towers in Dubai city are empty, and the government is pushing new high-rise building projects, so how can we expect the project managers to take risk management seriously! However, it does not mean that project manager compromises safety in any way, but with this type of sponsors, it becomes allowed to neglect many aspects of risk management that in other countries are being taken very seriously.