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¶ … project manager, what is your opinion about risk-Taking?
It is impossible to characterize risks as 'good' or 'bad.' The question is if the risks of the project are outweighed by the potential gains the project may offer. "Taking big risks can be beneficial to a firm that is able to accept them because it enables opportunity. For this reason, risk must be defined as including the probability of both good and bad outcomes" (Kwak & LaPlace 2005: 691). Risk-taking is an essential component of business, given that the future is always unknown. Yet the project manager must do all he or she can plan for likely future scenarios to mitigate unnecessary risks and ensure that the risks that are undertaken are likely to benefit the organization, improve its fortunes, and cause minimal harms.
It is vital that risk-taking does not become a 'cover up' for sloppy planning. Allowing a project to go over-budget and over-time is not an example of a positive risk, given that nothing is gained: rather, this is an example of mismanagement. In contrast, using a new form of technology to complete the project or a new technique might be a risk but could yield potential savings for the company. The ability to know when to take risks is often...
"Risk is not tangible or visible, therefore, managers' risk perceptions in a particular project varies by risk characteristics and project's internal and external environment" (Kwak & LaPlace 2005: 691).
Q2. Do you think the degree to which a project can take risks depends upon the project environment and organisational culture?
Although some people try to calculate risk and its likelihood in a scientific fashion, in truth, the willingness to take risks is often a character trait more than it is exact calculation. Furthermore, the organizational culture must be supportive of risk-taking and encourage project managers to 'think outside the box' rather than to follow tried, tested, and formulaic approaches. One way that an organization can support risk-taking is allowing managers to fail -- by not penalizing managers who take positive, justified risks, managers will be more likely to be experimental, versus an organization which takes punitive action against such employees.
There are also certain intangible elements which can give rise to a more risk-taking profile for…
Bibliography
Kwak, Y.H. & LaPlace, K.S. 2004. Examining risk tolerance in project-driven organization.
Technovation, 25 (2005) 691 -- 695. Available:
http://home.gwu.edu/~kwak/Risk_Tolerance.pdf
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