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Your team can improve the performance of its project by learning how to anticipate problems and identify new opportunities. The IDB course Risk Management in Development Projects can guide you in this learning process.
After working on projects for many years and focusing all my attention on planning, I decided one day to plan for scenarios – that is, to try to visualize what would happen in different situations. But the truth was that I didn’t know how to do it, especially when there are so many unknown variables. The result of my efforts was always the same: delays, cost overruns, and multiple justifications for the problems that kept coming up.
It is hard to believe that while we are quite capable of anticipating what might go wrong on our next vacation, and we even take advantage of opportunities like seasonal discounts for the purchase of airline tickets, we don’t take similar steps for projects that involve millions of dollars. How is this possible? Generally, it’s because we focus on solving problems instead of anticipating them.
Risk management in high-performance organizations
According to the Project Management Institute (PMI), the characteristics of a complex project include, among others, multiple stakeholders, ambiguity in the project characteristics, resources or stages, political influence, lack of understanding of the project scope, and a change in governance. All of this probably sounds familiar, which is why being able to effectively understand these difficulties can be a competitive advantage in the labor market.
One way to successfully navigate these complexities is to undertake timely and adequate risk management, which enables us to anticipate problems and take advantage of opportunities. The detailed PMI report, “Pulse of the Profession: Navigating Complexity,” indicates that 81% of high-performance organizations managed risk in their projects, while only 51% of low-performance organizations did so.
Risk management sparks curiosity among people
There is a growing recognition of the importance of anticipating difficulties. An example of this is the notable increase in the number of published documents that refer to risk management. Countries such as the United States, United Kingdom, China, Australia, Italy, Canada, Germany, and France generate the most documents on this topic.
The Scopus database also shows that half of all the documents on project risk management, including articles, conference papers, reviews, and others, that are available in the database, have been generated during the past decade (2010–2020). When we analyze other information systems, networks of repositories and virtual libraries, for example, we find that there are 2,387 documents on the topic of project risk management, which represents a 50% increase over the last two years. In terms of open-access documents, the Directory of Open Access Journals (DOAJ), listed 1,820 articles available on the topic at the time this article was written.
On the other hand, the Google Trends tool shows the popularity of risk management and project risk management in Google searches. The graphic below shows the search interest relative to the maximum value of the list corresponding to the region (in this case worldwide) and the specified period (over the past five years). The value of 100 indicates the maximum popularity of the term, 50 indicates half the popularity, and zero indicates that there were not sufficient data for this term. We see that the term risk management has maintained a high level of popularity compared with the term project risk management. This gap represents an excellent opportunity to introduce best practices in development projects. In fact, the Inter-American Development Bank launched a new risk management methodology in January
2021 that helps team members to make better decisions and anticipate adverse events on any given project.
According to the Web of Science in the last decade, the documents about project risk management are related to other fields such as engineering, environmental sciences, and business economics, What if we apply them to the diversity of sectors managed by multilaterals, in this case, the IDB?
Source: Web of Science
Source: IDB projects website
The implementation of risk management in development projects
As a result of this important analysis, as a by-product of the Inter-American Development Bank’s extensive experience with the implementation of development projects in Latin America and the Caribbean, and in alignment with the good international practices of the Project Management Institute (PMI), we created a free and 100% practice-based virtual course that explains how to be an effective manager of risks. For the first time, we have a course that focuses on risk management in social and economic development projects through case studies that present real situations and illustrate how they can undermine the scope, schedule, cost, and quality of projects, including social and environmental topics typical to these types of interventions.
The course will strengthen the ability of your team to identify risks. In addition, your team will learn how to take actions to address risks to ensure that they are not overlooked or neglected. The course offers practical knowledge and tools for dynamic and efficient risk management, including techniques for prioritization, response strategies, and action plans.
Strengthen your competitive advantage by learning to manage risks in projects that change lives. Learn more by enrolling in the MOOC Risk Management in Development Projects. We look forward to seeing you!
By Claudia Useche, IDB Senior Specialist in Learning and Knowledge Management and Diana Silva, IDB Data and Publications Analyst.