1.
Rationale
I have seen projects fail at the worst times throughout my career in R&D organizations in
the span of almost 28 years now. I worked on a beautiful process technology from concept
to pilot plant demonstration, only to be told that it was no longer required because the
market shifted focus. I developed a new polymer agglomerate, addressing all technical
challenges pitched and bated against it, only to be cut off because the company was
unwilling to go for any capitalization that the technology requires to commercialize. There
are a few more frustrating anecdotes but the gist, is failing at the worst time in research and
development, is getting your project stopped, shut down, or killed when you have already
spent a lot of resources including time and money.
So, what do we do? We derisk projects as early as possible, even at the proposal stages.
(student task: search for the definition of “derisking” online). The goal of project derisking,
according to Dan Adams (2020) is “to increase your chances of winning big or killing your
project as early as you can” by identifying uncertainties called risks, rating each according
to its level of impact and the likelihood of occurrence and putting in place mitigation
strategies starting with the most dangerous ones that can instantly kill projects, he refers to
as landmines. Derisking is about testing your project continuously, adapting and adjusting
to the business needs before it’s too late (Ries, E., 2011, The Lean Startup). Derisking in
other words is “risk management”.
2. Module Objectives
This module intends to enable the learners to:
1. Define derisking.
2. Explain the process of derisking projects
3. Be able to run a basic derisking workshop.
3. Highlights of Content
A framework of Risk Management such as those based on the Australia and New Zealand
Risk Management Standards AS/NZS 4360:1999 (Shortreed et. al, 2003) are given in the
following basic process steps (1) risk management planning, to prepare context for the
succeeding steps, (2) identifying risk, risk events, defining uncertainties that could happen
and pose threat to the project, (3) risk analysis in terms of level or severity of impact, and
likelihood or probability that it would occur, and evaluation vs criteria (4) risk response or
treatment whether to accept the risk, mitigate it, avoid or transfer it out, and finally (5) risk
monitoring and control to ensure the risk plans are timely executed and its effectiveness
assessed. Project derisking workshop is a perpetuation of these risk management process
steps applied in an R&D organization, more often in a group with a team of experts as your
reviewers.
The process and concepts of derisking can be applied in many situations including for
personal use. Before I decided to come back home in 2021, I went through a derisking
process to address uncertainties, like what will I do for a living, how many years will my
savings last, etc., followed through different mitigation strategies plan by plan. My peer
reviewers were my friends, my loved ones, and returning colleagues who have done it
before.
In R&D Management, this process or concept of derisking can be used in any stage of
project development because every stage raises a different scenario and a different set of
requirements and risks. It is recommended, however, to do the first workshop as soon as
the Project Team is ready to describe what their project is about, its input, process,
outputs, expected outcome and impact and timelines, necessary business criteria, and
more, as contexts to risk management. It is necessary that the team knows enough
information to share with expert peer reviewers and the recommendation is to conduct
derisking at the forefront in each stage of the development, including in the ideation or
proposal stage.
The student will benefit a lot from transcribing all of the steps taught in the derisking
workshop in this module, into a Gantt like task list complete with definition of roles and
responsibilities, and estimated time frame. This will help create a grand overview of how to
do a derisking workshop.
Reference:
Shortreed, J., Hicks, J., & Craig, L. (2003). Basic Frameworks for Risk Management. Network
for Environmental Risk Assessment and Management.