Prepare to Manage Crises!
Project Business Management
SERIES ARTICLE
By Oliver F. Lehmann
Munich, Germany
Summary
Many projects suffer from a commitment to active risk management. A look over the fence to another discipline, political management, shows, what the causes for such behavior may be, and the detrimental consequences it can have to all affected stakeholders.
The High Price of Discounting Risks in Projects
Risk management in projects begins with a straightforward decision: The decision actually to do it. Here is an example:
In 2016, the British government made a political decision to leave the European Union (EU).[1] One could call this project one of the most prominent organizational change projects on a global scale in the last decades. The implications were enormous for people in the United Kingdom and the European Community on an economic and cultural level, and the freedom of movement inside Europe would be massively restricted.
This process was named “Brexit” and was based on a public referendum (following the vague wording rather a survey than a referendum) on 23 June 2016, in which 51.9% of the respondents voted “Yes”, while 48.1% voted no[2].
By the end of 2020, the separation process was finished. The European Union and the United Kingdom (UK) had a contract describing how both would work together in the future to protect peace in Europe and allow their citizens a residual degree of freedom of movement and cross-border business.
One would assume that for a project of this magnitude and consequences, the British government would have done a meticulous risk analysis. One would further think that they had assessed foreseeable impacts, talked to individuals and organizations affected and involved, listened to businesses, and revisited the pros and contras of the discussion that led to the United Kingdom’s joining the EU[3] in the year.
Figure 1: The referendum questions
Nothing of that happened. Any discussion of the threats that Brexit may bring to the UK was immediately suppressed by calling it “Project Fear” and insulting the individuals asking for the discussion as “Bremoaners”. The debate became more and more emotional, and public actions such as the burning of EU[4] flags expressed nationalistic sentiments and showed how hard it would be to have a serious discussion of threats and opportunities.
Meanwhile, many of the predicted threats that should have been discussed have turned into reality:
- The formerly smooth transport of goods and people between the UK and the EU is heavily disrupted; as for the EU, the UK is now a foreign country outside the Union and vice versa, leading to an increased demand for paperwork, time losses, and costs.
The effects are easily visible in traffic congestions around the British channel, where truck drivers and holidaymakers are stuck for hours in congestions[5].
- Corporations are considering moving their UK-based European headquarters from the UK into the EU(Ranscombe, 2020). Some have already done that, others have reduced their UK staff, and some even went bankrupt[6].
More…
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Editor’s note: This series of articles is by Oliver Lehmann, author of the book “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018. See author profile below.
How to cite this article: Lehmann, O. F. (2022). Rejecting Risk Management? Prepare to Manage Crises! PM World Journal, Vol. XI, Issue VIII, August. Available online at https://pmworldlibrary.net/wp-content/uploads/2022/08/pmwj120-Aug2022-Lehmann-Risk-Management-in-Project-Business.pdf
About the Author
Oliver F. Lehmann
Munich, Germany
Oliver F. Lehmann, MSc, ACE, PMP, is a project management educator, author, consultant, and speaker. In addition, he is the owner of the website Project Business Foundation, a non-profit initiative for professionals and organizations involved in cross-corporate project business.
He studied Linguistics, Literature, and History at the University of Stuttgart and Project Management at the University of Liverpool, UK, where he holds a Master of Science Degree (with Merit). Oliver has trained thousands of project managers in Europe, the USA, and Asia in methodological project management, focusing on certification preparation. In addition, he is a visiting lecturer at the Technical University of Munich.
He has been a member and volunteer at PMI, the Project Management Institute, since 1998 and served as the President of the PMI Southern Germany Chapter from 2013 to 2018. Between 2004 and 2006, he contributed to PMI’s PM Network magazine, for which he provided a monthly editorial on page 1 called “Launch,” analyzing troubled projects around the world.
Oliver believes in three driving forces for personal improvement in project management: formal learning, experience, and observations. He resides in Munich, Bavaria, Germany, and can be contacted at oliver@oliverlehmann.com.
Oliver Lehmann is the author of the books:
- “Situational Project Management: The Dynamics of Success and Failure” (ISBN 9781498722612), published by Auerbach / Taylor & Francis in 2016
- “Project Business Management” (ISBN 9781138197503), published by Auerbach / Taylor & Francis in 2018.
His previous articles and papers for PM World Journal can be found here:
[1] The intention of this article is not to discuss the political view but use the Brexit project as an example of denial of risk management.
[2] (BBC, 2016)
[3] To be more accurate: The UK joined the EU’s predecessor organization, the European Economic Community (EEC).
[4] (Jolly, 2000)
[5] (Picheta & Goillandeau, 2022)
[6] (Mahmood, 2019)
