Elevate Your Stewardship Credibility: Align Program/Project Risk with Risk Appetite of the Business

You and I both know technology initiatives are crucial for maintaining competitive edge and driving growth. However, they come with inherent risks that can disrupt alignment with your vision and strategy. Understanding and mitigating these risks is not just a technical requirement but a strategic imperative that influences governance, project success, and ultimately, organisational excellence.

Risk, from a program and project perspective, isn't confined to the boundaries of the project itself. It extends to the environment surrounding the project, impacting various levels of the organisation. While risk management involves identifying, tracking, and mitigating these risks, to be really effective it requires a broader consideration and understanding of risk layers within the program, on the program, and at the company level. Without this even the most well-planned initiatives can falter, affecting both immediate project outcomes and long-term strategic goals.

Understanding Risk: More than Just Good Practice

Risk in program/project management involves identifying potential issues that could affect the project’s outcomes, tracking these risks throughout the project lifecycle, and implementing strategies to mitigate their impact. This is standard good practice, but to elevate project excellence, one must look deeper into the multiple layers of risk.

1. Program/Project-Level Risk: This includes risks directly related to the project’s scope, schedule, and budget. Amongst many, examples include technical challenges, resource capacity and availability, unanticipated changes (illness, staff changes, unplanned downtimes), and scope creep.
2. On or Surrounding the Program Risk: These are risks that originate externally but impact progress, such as changes in market conditions, regulatory shifts, or M&A’s or organisational restructuring.
3. Company-Level Risk: These risks are associated with the broader business environment and strategic direction, including competitive threats, financial stability, and overall governance practices.

Why Aligning Risk with Your Company’s Risk Appetite is Crucial

1.???? Strategic Alignment: Aligning project risks with the company’s risk appetite ensures that your initiatives are not just executed efficiently but are also in harmony with the strategic goals of the organisation. Demonstrating this alignment as a project leader shows you have an understanding of the business’s long-term vision and strategic priorities. It positions you as a forward-thinker who is not only focused on immediate project outcomes but also on how these outcomes contribute to the broader organisational objectives. This strategic alignment helps in gaining the confidence of others, securing the resources you need, and prioritising projects that drive significant value. Your ability to articulate and integrate the company’s goals into program/project level risk management enhances your credibility as someone who recognises that every initiative should support the company’s growth plans.?

2.???? Holistic Risk Perspective: By considering risk at multiple levels, you demonstrate a more mature approach to risk management. This perspective goes beyond the immediate project scope, encompassing the wider organisational environment. As a project steward, your ability to identify and manage risks that affect not only the project but also the surrounding environment shows you're considering and doing your utmost to assure the project’s success from all angles. This approach prepares you for external disruptions so you can adapt strategies to mitigate them effectively. Sharing this multi-layered risk management strategy with your peers and stakeholders highlights your thoroughness and foresight, increasing your reputation as a credible project leader who explores all possibilities.

3.???? Red-Flags When Missing: Understanding the consequences of not aligning project risks with the company’s risk appetite is critical. Highlighting the potential red flags such as misaligned objectives, unforeseen disruptions, and lack of stakeholder buy-in, demonstrates your proactive approach to risk management. Recognising and addressing these red flags early shows your willingness to preemptively raise and solve problems before they escalate. This will not only help save you, your project, and the organisation from potential problems but also enhance your standing as a proactive leader. It reassures stakeholders that under your stewardship, risks are more likely to be identified and managed in alignment with the risk appetite of the business.

Tangible Takeaways:

1.???? Understand and reference your company’s risk appetite: Increase your understanding of your company's risk appetite across financial, operational, and strategic dimensions and refer regularly to this framework when assessing and managing risks within your programs and projects. Aligning project risks with the established appetite enhances strategic alignment, increases stakeholder confidence in your proactive risk management approach, and helps prioritise initiatives that align closely with organisational goals.

2.???? Implement Governance-driven Risk Assessments: A governance-driven approach will align your risk management frameworks with the corporate governance policy on risk appetite and management. This ensures that risks are systematically identified and consistently evaluated at the project level, increasing transparency, accountability, and connection to strategic objectives. By reflecting corporate governance standards, you’ll shift towards more proactive risk management where project risks are managed in line with the company's risk strategy.

3.???? Monitor and Communicate Effectively: Elevate your stewardship and build credibility through clear and comprehensive communication channels. Regularly update your governing boards via mechanisms at the level of detail that’s relevant to them. Focus reporting and discuss potential red flags openly, presenting effective solutions and proactive measures to address them. This approach not only enhances credibility but also ensures informed decision-making and support from key stakeholders.

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How do you handle risk management in your system implementations and transformation activities? Which of the tangible takeaways would give you some immediate results if actioned now? ?

Share your experiences and insights on managing risk at different levels within your organisation. Let’s amplify our projects’ excellence and impact together.