Douglas Hubbard on Pushing The Boundary In Risk Management
If you follow my ramblings you know I am a big fan of Douglas Hubbard’s work on risk management and especially his book, “How to Measure Anything.” He is currently offering a white paper covering “Pushing The Boundary: Risk Management Beyond Insurance”
From the white paper’s foreword:
1. Uncertainty can be assessed and measured, Even With Unknown Unknowns…if the object of measurement is well defined. “Even when faced with the perfect unknown unknowns, scenario analyses will frame the problem and help to reduce uncertainty.”
2. Establish early warning systems. Risk radars must be built into systems for continuous scanning. SEER-SEM’s monitoring and control is an example of early warning.
3. Prudent forecasting is possible and necessary. My favorite estimates (forecasts) are essential to reduce uncertainty. Forecasting should assume simple trends can’t be relied upon and that specifics should be identified and forecasted. “It is a first step toward mitigating the risk of being surprised by unknown unknowns, or the now proverbial black swan.”
4. Contingency planning is indispensable. “Since unknown unknowns keep generating surprises it is important to develop contingency plans that cover a whole range of scenarios.”
5. Resilience buffers will dilute adverse impacts. “Even the best risk assessment and most efficient forecasting cannot protect against the adverse impact of uncertainty. The challenge for risk managers will be to transfer the idea of resilience buffers to other areas in order to mitigate the adverse impacts of uncertainty.”
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
This post was written by
Dan Galorath is the President and CEO of Galorath Incorporated and the chief architect of SEER-SEM, an algorithmic project management software application. He is a recognized expert in the fields of software estimation and sizing and the author of Software Sizing, Estimation, and Risk Management.
Comments
Project Prediction Infographic
