ADVISORY ARTICLE
By Dr. Robert Chapman
United Kingdom
Is Project Risk Intelligence an important concept for the execution of effective project risk management in the UK and internationally? It is particularly important if executives and directors are not cognizant of the need to amend their organization’s current project risk management practices where they are both immature and inefficient. Again, for organizations where the answer to the question “are risk management practices typically implemented as a matter of routine and never challenged”, the concept must be relevant. The concept refers to the acquisition of knowledge, continuous learning and improving the maturity of current practices. It is encouraging movement away from the repetition of current practices which are known to have shortcomings and to instigate improvements. As a consequence, it involves having an enquiring mind, a willingness to challenge current practices, to follow the writings of thought leaders, to seek out emerging risk management practices, to keep abreast of developments in the profession and to consider contrasting view-points. Risk intelligence is currently considered to be less about the efficient operation of the risk management function and more about being forward looking, giving greater emphasis to exploiting opportunities, studying movement in the risk landscape and developing a responsive agile approach. However, unless the building blocks for project risk management are in place, see Appendix 1, the possibility of developing enhanced processes will be severely curtailed.
Origin: The origin of the term risk intelligence is not clear and has been attributed to a number of individuals such as Columbia University professor Leo Tilman[1] and UK philosopher Dylan Evans[2]. The concept has been described in different ways by different writers. It is not readily discernible if the concept has been applied to the delivery of projects to-date.
Early Definitions: Early definitions of risk intelligence have tended to describe the concept very narrowly. Three examples are the definitions proposed by Apgar, Evans and Funston which are outlined below.
- David Apgar[3]: “an individual’s or an organization’s ability to weigh risk effectively” which he describes as being accomplished by three primary activities: by (1) classifying, characterizing and calculating threats; (2) storing, retrieving and acting upon information; and (3) communicating effectively.
- Dylan Evans[4]: “the ability to estimate probabilities accurately”.
- Frederick Funston[5]: “a dynamic approach to protect and create value amid uncertainty. It is an enterprise-wide process integrating people, processes (systems), and tools to increase information available to decision makers for improved decision making”
To be clear risk intelligence is not the set of processes adopted for the transformation of risk data into a format useful for risk analysis, evaluation, treatment, planning and reporting purposes. Transformation of data, typically with the aid of statistics, it could be argued is ‘business as usual’ and does not necessarily involve the acquisition and application of learning. Likewise, the concept goes beyond selecting those threats to accept and those to transfer.
Broader Definition: Perceptions of risk intelligence have evolved over time and the definition by Tilman below appears to be closer to current thinking.
- Leo Tilman[6]: “the organizational ability to think holistically about risk and uncertainty, speak a common risk language, and effectively use forward-looking risk concepts and tools in making better decisions, alleviating threats, capitalizing on opportunities, and creating lasting value”
A description of risk intelligence promulgated by the large accountancy firms focusses on practices which change the emphasis away from considering solely downside risk and governance compliance to include seeking opportunities and becoming familiar with the changing risk landscape, with the goal of improving business performance. This change in mindset is a stepping stone towards risk intelligent practices.
Proposal: There does not appear to be a universally accepted definition of risk intelligence. It is suggested here it is a combination of a series of behaviours, including: Commitment, Communication, Capital, Capability, Capacity, Culture, Collaboration and Coordination (the eight Cs).
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How to cite this article: Chapman, R. J., (2024). The eight components of Project Risk Intelligence; PM World Journal, Vol. XIII, Issue III, March. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/03/pmwj139-Mar2024-Chapman-eight-components-of-Project-Risk-Intelligence.pdf
About the Author
Robert J. Chapman, PhD, MSc.
United Kingdom
Dr Robert J Chapman is an international risk management specialist. He has provided risk management services in the UK, the Republic of Ireland, Holland, UAE, South Africa, Malaysia and Qatar on multi-billion programmes and projects across 14 different industries. He is author of the texts: ‘The SME business guide to fraud risk management’ published by Routledge, ‘Simple tools and techniques for enterprise risk management’ 2nd edition, published by John Wiley and Sons Limited, ‘The Rules of Project Risk Management, implementation guidelines for major projects’ 2nd edition published by Routledge Publishing and ‘Retaining design team members, a risk management approach’ published by RIBA Enterprises. He holds a PhD in risk management from Reading University and has been elected a fellow of the IRM, CIHT, APM and ICM and is a former member of the RIBA. Robert has passed the M_o_R, APM and PMI risk examinations. In addition, he has provided project and risk management training in Scotland, England, Singapore and Malaysia. Robert has been an external PhD examiner.
Robert Chapman can be contacted at DrChapmanAssociates@outlook.com
[1] Leo M Tilman. President and CEO of Tilman & Company, a global strategic advisory firm and a thought leader on strategy and risk intelligence. https://lmtilman.com/leo-m-tilman/
[2] See https://en.wikipedia.org/wiki/Dylan_Evans#cite_ref-6 plus https://www.mindtherisk.com/literature/71-risk-intelligence-how-to-live-with-uncertainty-by-dylan-evans
[3] Apgar, D. (2006) “Risk Intelligence: Learning to Manage What We Don’t Know”, Harvard Business Press.
[4] Evans, D. (2012) “Risk Intelligence: How to Live with Uncertainty” Atlantic Books
[5] Funston, F., and Wagner, Stephen (2010) “Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise”, John Wiley and Sons Ltd.
[6] Tilman, L. (2013) Risk Intelligence, A Bedrock of Dynamism and Lasting Value Creation, The European Financial Review
